Less than two weeks before the midterm elections, President Donald Trump on Thursday announced a plan to lower prices for some prescription drugs, saying it would stop unfair practices that force Americans to pay much more than people in other countries for the same medications.
"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 in a speech at the Department of Health and Human Services.
"Same company. Same box. Same pill. Made in the exact same location, and you would go to some countries and it would be 20 percent of the cost of what we pay," said Trump, who predicted the plan will save Americans billions. "We're fixing it."
But consumers take note:
- The plan would not apply to medicines people buy at the pharmacy, just ones administered in a doctor's office, as are many cancer medications and drugs for immune system problems. Physician-administered drugs can be very expensive, but pharmacy drugs account for the vast majority of what consumers buy.
- Don't expect immediate rollbacks. Officials said the complex proposal could take more than a year to put into effect.
In another twist, the plan is structured as an experiment through a Medicare innovation center empowered to seek savings by the Affordable Care Act. That's the law also known as "Obamacare," which Trump is committed to repealing.
Trump has long promised sweeping action to attack drug prices, both as president and when he was running for the White House. He made his latest announcement just ahead of the Nov. 6 elections, with health care high among voters' concerns.
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Under the plan, Medicare payment for drugs administered in doctors' offices would gradually shift to a level based on international prices. Prices in other countries are lower because governments directly negotiate with manufacturers.
Drugmakers immediately pushed back, arguing the plan amounts to government price-setting.
"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. "These proposals are to the detriment of American patients."
Trump is linking the prices Americans complain about to one of his longstanding grievances: foreign countries the president says are taking advantage of U.S. research breakthroughs.
Drug pricing expert Peter Bach of Memorial Sloan Kettering's Center for Health Policy and Outcomes called the plan "a pretty substantive proposal" but one that faces "serious political challenges."
"The rhetoric about finally dealing with foreign freeloading suggests that we are going to take steps to get other countries to pay their fair share for innovation," Bach added. But that's "quite literally the opposite of what is being proposed. What is being proposed is that we freeload off of other countries' ability to negotiate more effectively."
Democratic leaders on Capitol Hill were dismissive. House Minority Leader Nancy Pelosi of California said if Trump wants to save seniors money he should seek congressional approval for Medicare to negotiate prices for its main prescription drug program, "Part D." Senate Democratic Leader Chuck Schumer of New York said "it's hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election."
The health insurance industry, at odds with drugmakers over prices, was pleased with the administration's action.
Matt Eyles, president and CEO of America's Health Insurance Plans, said: "Drug prices are out of control, and we commend the Administration for its continued commitment to reduce drug prices."
As an experiment, the proposal would apply to half the country. Officials said they're seeking input on how to select the areas that will take part in the new pricing system. HHS Secretary Alex Azar said politics would have nothing to do with it.
In advance of Trump's speech, HHS released a report that found U.S. prices for the top drugs administered in doctors' offices are nearly twice as high as in foreign countries. The list includes many cancer drugs. Medicare pays directly for them under its "Part B" coverage for outpatient care.
Physician-administered drugs cost Medicare $27 billion in 2016. HHS says the plan would save Medicare $17.2 billion over five years. Beneficiaries would save an estimated $3.4 billion through lower cost-sharing.
The plan could meet resistance not only from drugmakers but from doctors, now paid a percentage of the cost of the medications they administer. However, HHS officials said the plan is designed so it would not cut into doctors' reimbursements.
Azar said more plans are being developed on drug costs.
"This is not the end of the road, the end of the journey," he said. "There is more coming."
Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder." But it's largely been business as usual for drugmakers even as Trump has predicted "massive" voluntary price cuts.
A recent Associated Press analysis of prices for brand-name drugs found far more increases than cuts in the first seven months of this year. The analysis found 96 price hikes for every price cut. The number of increases slowed somewhat and they were not quite as steep as in past years, the AP found.
The Trump administration proposal is open for public comment for 60 days.