What to expect from Trump's drug pricing announcement: Medicare demos, drug compacts

Donald Trump speaking
It's unclear whether the demonstration program will be mandatory or voluntary. (Gage Skidmore/CC BY-SA 2.0)

Efforts by the Trump administration to bring down ever-increasing drug prices could include a first-of-its-kind demonstration program.

A White House announcement on drug pricing is scheduled to happen soon, or at least eventually. President Donald Trump was expected to discuss new drug pricing initiatives on Tuesday, but the speech has been pushed back once again. It was initially expected in late April and then rescheduled for the first week of May.

While the White House has not commented on what the president will address, industry insiders expect it will include new Medicare demonstration programs along with a request for information seeking industry feedback on different proposed programs. 

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"That would be consistent with what we've seen and heard from the agency so far," Dan Mendelson, CEO at Avalere Health and a former associate director at the Office of Management and Budget, told FierceHealthcare. A notice regarding drug prices is currently in review at the OMB. 

He added that the administration is unlikely to do anything to directly control the price of drugs, like establishing price ceilings. It's also unclear whether a demonstration program will be mandatory or voluntary, as the agency has given mixed signals for months. 

RELATED: UnitedHealthcare to share drug rebates with 7M members

Mendelson added that the agency has much more leverage over Medicare than it does private insurers, and most of the increases in Medicaid could be attributed to the program's expansion under the 2010 Affordable Care Act. 

Ross Margulies, an attorney at Foley Hoag, agreed, adding that the White House might also look at interstate drug compacts and point-of-sale rebates. 

"Also included in the President's budget, HHS could allow up to five state Medicaid programs to negotiate drug pricing with drugmakers," he told FierceHealthcare. "With five states, there is a bigger pool of lives covered, possibly giving them more leverage than just one state."

Under point-of-sale rebates, pharmacy benefit managers could be forced to share more of the savings they get from drugmakers with customers. Some private insurers have already made plans to test that approach, garnering praise from the Trump administration. In March, UnitedHealthcare announced that it plans to offer such rebates to its customers starting in 2019. HHS Secretary Alex Azar lauded the move and said the policy "is a prime example" of what the administration wants to achieve.

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