Trump seeks to drive down certain prescription drug prices in US to align with those abroad

US President Donald Trump announced plans Thursday to introduce an initiative aimed at lowering certain prescription drug costs by using international prices as a benchmark for setting Medicare payments. "Same company, same box, same pill, made in the exact same location, and you go to some countries and it would be 20 percent of what we pay [in the US]…we're fixing it," Trump said. 

The proposed regulation would establish an international pricing index (IPI) that would be used as a reference to set prices paid for drugs through Medicare Part B, which includes physician-administered medicines such as infusions. The Department of Health and Human Services (HHS) estimated that the IPI model would provide $17.2 billion in savings to patients and taxpayers over a five-year period.

According to HHS, the IPI model would help boost treatment adherence by lowering costs for Medicare beneficiaries, and introduce competition to the system of paying for physician-administered drugs by bringing in private-sector vendors, who for the first time would be able to procure drugs, distribute them to doctors and hospitals, and take on the responsibility of billing Medicare. The department also stated that the changes would eliminate financial incentives for doctors to use more expensive treatments, as well as correct the disparity in drug prices between the US and other countries. 

The health department, through the Centers for Medicare & Medicaid Services, is seeking public input on the new IPI model, and aims to issue a proposed rule regarding the index next spring before possibly implementing the model in early 2020. 

"With this innovative approach, [Trump] is now proposing historic changes to how Medicare pays for some of the most expensive prescription drugs, securing for the American people a share of the price concessions that drugmakers voluntarily give to other countries," commented HHS Secretary Alex Azar. 

Commenting on the plans, Steven Ubl, CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), remarked that "the administration is imposing foreign price controls from countries with socialised healthcare systems that deny their citizens access and discourage innovation." He suggested the proposals would "jeopardise access to medicines for seniors and patients with disabilities living with devastating conditions such as cancer, rheumatoid arthritis and other autoimmune diseases." Ubl also warned that the IPI model would hinder patient access by "severely altering" the Medicare Part B programme by reducing doctor reimbursement and inserting middlemen between patients and their physicians.

In May, Trump suggested that drugmakers would soon unveil "voluntary massive" price cuts on their products, and hinted more recently at upcoming plans to "substantially" reduce drug costs in the country. The President has also released a blueprint outlining initiatives to reduce drug prices by bolstering competition. Meanwhile, HHS unveiled a proposed rule change earlier this month that would require pharmaceutical companies to provide the list prices of certain drugs in direct-to-consumer advertisements. 

For related analysis, see ViewPoints: Trump leads latest assault against Part B bellwethers.

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