The administration unveiled it’s policy plan to tackle the rising cost of drugs. The "American Patients First" blueprint builds on the administration’s 2019 budget proposal and calls for changes in Medicare Part D alongside a focus on price transparency. This "American Patients First" policy plan tackles the rising cost of drugs.
The President called the proposal "the most sweeping action in history to lower the price of prescription drugs for the American people" at an event to mark the release of the blueprint (PDF).
The plan focuses on four central goals:
- Increasing competition.
- Easing negotiation.
- Creating incentives to lower prices.
- Lowering out-of-pocket spending on drugs.
The plan includes actions the administration may take immediately and those that the White House is considering; it is seeking feedback on these elements from stakeholders. The Food and Drug Administration will begin acting quickly to bring more generics and biosimilars to the market to address competition issues, for example.
The administration plans to pursue ways to encourage sharing samples of generics and education on biosimilars to encourage more physicians to promote them.
Senior administration officials say that the President would not pursue plans to negotiate directly with pharmaceutical companies through Medicare, a proposal that Democrats have touted. Instead, "American Patients First" calls for reforms in Medicare Part D to allow plan sponsors to negotiate lower prices for high-cost drugs, including negotiation tools that may be available to private payers. The administration also plans to address incentives in Part D to push drug companies to lower prices.
There’s a big incentive to do this and our programs will no longer reward companies that constantly raise prices.
- The plan builds on elements included the administration’s budget proposal for fiscal year 2019, which includes a five-part plan to restructure the Part D program to reduce drug costs. The budget includes proposals to cap spending in Medicare Part B and move Part B coverage into Part D to facilitate better negotiation.
- Another area of particular focus is "foreign freeloading." The U.S. pays for 70% of the profits of branded drugs among OECD countries because many have government-run health systems that pay one price for drugs, senior administration officials said. This leads American patients to subsidize the costs of medical research and development for other countries.
The administration reports that many countries’ medicine is a tiny fraction of what the medicine actually costs in the USA, which is unfair and will not continue.
The administration’s the Council of Economic Advisers already outlined a number of proposals for reducing drug prices in a recent report, which includes an option to possibly allow pharmacy managers a benefit to share rebates directly with consumers.
This would eliminate the middlemen who have benefitted the most from the existing drug industry program.
Department of Health and Human Services Secretary Alex Azar said that the administration would not propose "cheap political gimmicks" and was instead focused on a "sophisticated" approach centered on fostering competition in the private sector.
"American Patients First" is the "most comprehensive action plan for drug affordability of any president in our history," Azar said. The agency’s focus on price transparency which is another crucial element of the drug pricing plan. The FDA, for example, is going to immediately begin to examine ways to push drug companies to disclose prices in their advertising.