Trump seeks to base Medicare drug prices on lower overseas rates

Trump seeks to base Medicare drug prices on lower overseas rates

This comes less than two weeks before midterm elections.

"We are taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country", Trump said during a speech at the Department of Health and Human Services.

This International Pricing Index model, which would be phased in over five years and take effect in half the nation, would save $17.2 billion for patients and taxpayers, the agency said.

Drug industry lobby the Pharmaceutical Research and Manufacturers of America, or PhRMA, quickly criticized the proposal in a statement that appeared to be meant as a dig at universal healthcare - something that a growing number of political leaders have proposed for the United States - in addition to defending the U.S. pricing system.

Such a scenario could fundamentally change the nation's political approach to health care, making it much more likely that additional states would move to expand Medicaid coverage for low-income Americans and push back on efforts by administration efforts to relax regulatory standards. Under the new model, Medicare would pay doctors prices more closely aligned with the prices other countries pay.

Rather than "divine the value" of a drug, the proposal "respects the fact that pharma voluntarily agreed to sell drugs at discounts elsewhere and we're saying 'give us some of that, '" Azar said at a briefing with reporters after Trump's speech.

"The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation", Stephen Ubl, president of the Pharmaceutical Research and Manufacturers of America, said in a statement.

The plan will affect about a third of the $30 billion spent each year by Medicare Part B, which covers medications administered at a doctor's office or in a hospital.

And drug companies are not going to "walk away" from the world's largest payer for prescription drugs, Azar argued. Trump wants to tie what Medicare pays for certain drugs to much lower prices paid in other economically advanced countries. Beneficiaries would save an estimated $3.4 billion through lower cost-sharing for physician-administered drugs. Most of the drugs in the Part B plan are a kind of drug called a "biologic", or drugs made of living organisms (usually cells).

Trump said that with this new policy, the USA will finally begin to confront one of the most unfair practices that drives up the cost of medicine in the United States.

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Announcing his plan on Thursday, Trump linked the prices Americans complain about to one of his longstanding grievances: foreign countries the president says are taking advantage of USA research breakthroughs.

"The reality is he could very easily not take this on and do what other administrations have done and let the prices keep rising". "We're fixing it. That's called real-life experience, I guess", Trump added.

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

Already, however, there is skepticism about how much this will impact the drug industry.

The report "provides troubling insight into how the current worldwide drug pricing system has put America in last place, " Azar tweeted.

The 19-page report looks specifically at drugs purchased and dispensed by doctors themselves under Medicare's Part B program.

The HHS study, for example, shows that the US spent about $1.7 billion in 2016 on Rituxan, a drug made by Biogen Inc. that treats non-Hodgkin's lymphoma. The report notes Part B is not subject to restrictions on the drugs that are covered, meaning there is little incentive to tamp down costs. CMS expressed concerns that the ASP plus add-on methodology incentivizes providers to prescribe higher-cost drugs to maximize their revenue, especially since the amount of the add-on payment increases as the price of the drug rises. 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.

The proposed International Pricing Index (IPI) payment would use private-sector vendors to procure, distribute, and bill Medicare for certain physician-administered drugs.

The president in May also claimed drug companies would be announcing "massive" voluntary price cuts. The proposed rule could come in spring 2019, and Azar said the new model could begin in late 2019 or early 2020.