He added that there are widespread misperceptions about the effects of direct government negotiation on drug prices, and that these would achieve minimal savings – unless the government was willing to deny access to certain medicines or set drug prices.
Azar said that importing drugs from overseas was a gimmick because there was no way to ensure the drugs weren’t counterfeit and “Canada’s drug market is simply too small to bring down prices here”.
Another proposal to bring negotiation to bear on pricing is a competitive acquisition program that would merge Part B drugs, those administered in doctors’ offices, with Part D, where they would be subject to negotiation, and coverage decisions, for the first time.
But Trump has since abandoned ideas to lower drug costs he supported during the campaign, including allowing the government’s Medicare plan for older Americans to negotiate prices directly with drugmakers, and enabling US consumers to import lower-cost medicines from other countries.
In particular, Part D relies on its noninterference clause, allowing health care providers to negotiate directly with drug manufacturers free from the influence of the Secretary of Health and Human Services. Azar said there are things Congress needs to do – such as removing the cap it imposed under the Affordable Care Act on the penalty that drug companies pay when they raise prices faster than inflation.
Meanwhile, leading Congressional Democrats offered more aggressive proposals for lowering drug prices, most requiring legislative action. “If we want to have a real market for drugs, why not have them disclose their prices in the ads?”
ABP-215 is approved for the treatment of colorectal, lung, brain, kidney, and cervical cancers in adult patients.
The administration also released a 44-page blueprint of the plan, entitled American Patients First. Azar, a former Eli Lilly executive, said that drugmakers could be punished for blocking the development of generics and biosimilars. Ronny Gal, a securities analyst at Sanford C. Bernstein & Company, said the president’s speech was “very, very positive to pharma”. The administration would lower out-of-pocket costs for Medicare patients by requiring prescription drug plans to pass on some of the discounts and rebates they receive from drug manufacturers. Major drugmakers Amgen, Gilead Sciences, Merck and Pfizer all enjoyed stock price spikes after the speech, as did the two largest indexes for pharmaceutical and biotech companies.
Despite the combative rhetoric, pharma share prices rose pretty much across the board after the comments, suggesting the investors aren’t anxious about the impact of the proposals.
The price on Celgene’s widely used Revlimid – a connection Evercore ISI’s Umer Raffat made in a note this afternoon – was jacked by 20% over the a year ago, which means that Medicare patients pay an extra $115 month, moving from $575 to $690 per month, for their share of a drug that had cost $11,500 a month in 2015.
President Trump also praised FDA for promoting competition in drug markets by approving a record number of new generic drugs, as emphasized over the past year by commissioner Scott Gottlieb. “Medicare gets a bill for the drug, composed of the standard price plus a 6% markup, and we pay it. Compare that with the negotiation in Part D: Plans determine whether a drug should be covered or whether an alternative is superior”.
Those drugs are now covered under the regular Medicare program, known as Part B. Shifting them to Part D program, where their prices would be negotiated by PBMs, could lower their prices while also giving the industry more business.
The administration is considering rules instituting site neutrality that would eliminate or reduce facility fees charged for drugs issued at hospitals and hospital-owned clinics. But Medicare rules exempt rebates from being considered as kickbacks.
Trump’s announcement drew cautious responses from oncology groups and patient advocates.
According to an ASCO spokesperson, the organization is reviewing the administration’s plan and has declined to make a statement. Peter Maybarduk, director of Public Citizen’s Access to Medicines program, said the president’s plan does little to make medicine more affordable.
President Donald Trump’s long-promised plan to bring down drug prices would mostly spare the pharmaceutical industry he previously accused of “getting away with murder”.