US to consider expanding Medicare's ability to negotiate drug prices

US Health and Human Services (HHS) Secretary Alex Azar on Monday said that the government is considering measures that would increase the ability of Medicare to negotiate drug prices with pharmaceutical companies. Specifically, the agency is examining an alternative system that would allow Medicare Part B to directly negotiate prices with drugmakers similar as Part D. The news comes after President Donald Trump unveiled a blueprint targeting rising drug prices in the US last week.  

Azar, who also previously promised that bold action would soon be undertaken for US drug pricing, said that the administration's overall plan for lowering drug prices features four strategies, namely improved competition, lowering out-of-pocket costs, enhanced negotiation and incentives for lower list prices. 

"For too long, there's been a lot of talk on drug prices, and no action," Azar commented. The Secretary continued "drug companies have insisted we can have new cures or affordable prices, but not both, adding "I've been a drug company executive—I know the tired talking points: the idea that if one penny disappears from pharma profit margins, American innovation will grind to a halt."  

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Azar added that HHS will soon issue a request to use a competitive acquisition programme for Part B, suggesting that private sector entities are better equipped to negotiate better deals for the programme, noting that President Trump has called for the department to merge Part B into Part D, thus permitting negotiation. 

In supporting a need for expanded negotiation, Azar explained that current rules restrict the ability of Medicare Part D to effectively negotiate prices, specifically noting that six drug types are placed into "protected classes." Azar stated that the average discount secured by the government for these drugs is 6 percent, compared to discounts of 20 percent to 30 percent achieved in the private sector. 

 "We look forward to working with industry to build a better system," Azar commented, adding "but if industry isn't willing to work with us to lower prices, President Trump and his administration will keep turning up the pressure—until the system finally puts American patients first." 

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