Continuing his attack on high drug prices, President Donald Trump and Health and Human Services (HHS) secretary Alex Azar launched a salvo to change how Medicare pays for drugs administered in doctors' offices and hospital clinics.
The current Medicare Part B reimbursement system pays providers and hospitals based on the average sales price (ASP) of a Part B drug, plus a 6 percent add-on for storing the drug properly.
In a speech Thursday at the Department of Health and Human Services, Trump said his administration would be taking the "revolutionary" move of allowing Medicare to directly negotiate prices with drug companies, which he says have "rigged" the system, causing United States patients to pay more for their medicines.
President Donald Trump announces a plan to overhaul how Medicare pays for certain drugs during a speech at the Department of Health and Human Services October 25, 2018 in Washington, DC.
"The United States will finally begin to confront one of the most unfair practices. that drives up the cost of medicine in the United States", Trump said.
"Same company. Same box". In his announcement of the plan, President Trump said the U.S. would save money "for our seniors by paying the prices other countries pay".
- 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. "For decades, other countries have rigged the system so that American patients are charged more for the same drug", he said.
It also highlights an increasing push by the president personally and his administration more generally to emphasize health care in the runup to the elections, an issue polls show is top of mind with voters.
Azar rejected the pharma industry's argument that the plan - which among other things would tie Part B drug payments partly to prices elsewhere in the world for the same products - would stifle innovation calling it "mathematically unbelievable".
In some cases, European patients have to pay the difference between the government's reference price and what the company charges for a drug, said University of York's Moreno-Serra.
"Adopting foreign price controls on American innovation puts America's patients last and diminishes their hope for a better future".
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. "These proposals are to the detriment of American patients".
Nicholas Florko is a Washington correspondent for STAT, reporting on the the intersection of politics and health policy. Prices in other countries are lower because governments directly negotiate with manufacturers. But that's "quite literally the opposite of what is being proposed". Nothing special, just the prices that other countries pay.
Democratic leaders on Capitol Hill were dismissive.
In 2015, Medicare spent $26 billion on Part B drugs.
Trump added that doctors would be paid "a flat rate" regardless of the cost of medications that they prescribe in order to counter doctors he says who prescribe more expensive medications so they can earn a higher commission.
The main health insurance industry trade group, at odds with drugmakers over prices, applauded the administration's action.
Maintain financial stability for physicians while removing incentives for higher 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 of the country that will take part in the new pricing system. "US prices were higher for most of the drugs included in the analysis, and USA prices were more likely to be the highest prices paid among the countries in our study". 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). Rather, the idea would be to set a price that Medicare would pay.
The move would cut costs for Medicare and save beneficiaries millions of dollars, according to the Times.
The plan could meet resistance not only from drugmakers but from doctors, now paid a percentage of the cost of the medications they administer.
Azar said more plans are being developed on drug costs. Matt Brow, president of industry consulting firm Avalere Health, said he expects the administration to publish the rule for comment by year's end. Since the Affordable Care Act came into effect, Republicans have been determined to strip away the law's most progressive proposals.
Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder". "It really changes business as usual for a lot of institutions that make money off of high prices of drugs". "It would increase prices in Europe by an unclear amount, so it seems like it would lower overall drug spending and innovation".