Trump Seeks To Base Medicare Drug Prices On Lower Overseas Rates

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Today, Medicare reimburses doctors and hospitals the average sales prices of the drugs, plus 6 percent to cover the cost of giving medications to patients.

Under a proposal announced by the Department of Health and Human Services, payment for certain drugs administered in doctors' offices would shift to a level based on worldwide prices.

The US, he said, spends more than Dollars 1 billion a year on two drugs to treat bone disease. CMS estimates that the Target Price would produce about a 30% savings over total spending for the selected Part B drugs. The administration expects to begin piloting that program in half of the country in late 2019 or early 2020. "This happens because the government pays whatever price the drug companies set without any negotiation whatsoever".

But the administration has in fact been supportive or actively engaged in efforts that could affect people with pre-existing conditions - from repeated attempts to roll back Obamacare to efforts at the agency level to loosen regulations that provide ironclad protections for consumers who are or have been sick.

"It's hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election", Democratic Senate Minority Leader Chuck Schumer said in a statement.

After almost a decade of promises to repeal and replace the Affordable Care Act, Republicans have struggled to message health care on the campaign trail. His administration has worked to chip away at several ACA requirements, including supporting GOP repeal of the individual mandate in the party's tax overhaul and supporting waivers for Medicaid work requirements.

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President Trump said his administration is taking immediate action to stop the "global freeloading" by foreign nations when it comes to the price that American patients are paying for prescription drugs.

"Medicare could achieve significant savings if prices in the USA were similar to those of other large market based economies", the report concludes.

Thursday's address represents the next leg in the Trump administration's quest to appear tough on the pharmaceutical industry. "I don't think so", the secretary said of drug makers.

"The reality is he could very easily not take this on and do what other administrations have done and let the prices keep rising".

Under the new plan, the Department of Health and Human Services would allow Medicare to determine the price it pays for certain drugs, based on the cheaper prices paid by other nations, Trump said. "President Trump asked us to fix this problem and here's how we plan to do it".

Foreign countries, he said, even threaten to disrespect USA patents if they are not given cheaper prices on drugs.

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The ratio of average payment based on ASP versus the average global target index would shift incrementally over a 5-year period in favor of the worldwide target, until in the program's fifth year payment would be targeted at 126% of the average worldwide price, as opposed to the 180% that the U.S now pays compared to those same average prices.

The proposed International Pricing Index (IPI) payment would use private-sector vendors to procure, distribute, and bill Medicare for certain physician-administered drugs. It would remove incentives for doctors to prescribe more expensive drugs by paying them a flat fee for storing the medications instead of a fee based on a percentage of the drug's price. Medicare pays directly for them under its "Part B" coverage for outpatient care.

Sales of Amgen drugs through Part B, for example, totaled about $3.7 billion in 2016 - or about a fifth of the biotech's US revenue of $17.5 billion in 2016, according to figures from Leerink. Drugs sold at the pharmacy are covered under Medicare Part D.

Healthcare and high prescription drug prices have consistently polled as top voter concerns ahead of November 6 elections where Trump's Republicans are battling to maintain control of Congress. In a March Kaiser Family Foundation poll, eight in 10 respondents said drug costs are unreasonable and 92 percent said passing legislation to bring down the cost of prescription drugs should be a top or important priority.

While Medicare is barred from explicitly negotiating prices with drug companies, Trump's proposed changes are all created to use the collective power of the growing Medicare market to force drugmakers to bring down their prices or lose access to a potentially lucrative market. Trump can complain about high drug prices all he wants.

Some experts said this policy - if it's implemented - could have a big impact on drug prices.

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