President Trump’s much-anticipated speech on prescription drug prices on Friday contained plenty of anti-pharma rhetoric – but despite some concerns about proposed changes, shares in the sector rose in response to what were seen as largely hollow threats.
The President also took aim at Pharmacy Benefit Managers (PBM) such as Express Scripts – saying these ‘middlemen’ would be ‘eliminated’ – but lack of detail on this threat also saw PBM share prices rise following the speech as well.
The headline news from the American Patients First blueprint is that Trump hasn’t followed through on earlier promises to have the federal government negotiate the price of drugs used in the Medicare system, and hasn’t made it possible for US citizens to import lower-cost medicines from overseas.
Instead, the intention is to give new powers to Medicare’s private prescription drug plans (Part D) to do so, with a report to be sent to the White House “on whether lower prices on some Medicare Part B drugs could be negotiated for by Part D plans.” Part B drugs are dispensed at physicians’ offices and hospitals.
Other measures include having the FDA require pharma companies to include pricing in prescription drug advertising, using Medicare’s drug-pricing dashboard to make price increases and generic competition more transparent.
Probably the most significant policy is the proposal to outlaw pharma offering rebates in return for inclusion of their products on PBM and health plan formularies – discounts which are typically not passed onto consumers, and which many market analysts say encourage price increases.
The blueprint also takes aim at patient out-of-pocket costs, for example proposing to do away with rules that limit what pharmacists can share about costs with patients, for example if they could pay less out-of-pocket by not using insurance.
Health and Human Secretary Alex Azar said the document includes more than 50 measures that his agency has already put into action or has planned, although some will require new legislation. Democrats have accused the President of backing down from his earlier pledges and caving into pressure from the pharma lobby.
In his speech, Trump described the current “broken system” of medicines delivery as an “incredible abuse” by all parties involved.
He had plenty of vitriol for the pharma industry, saying: “the drug lobby is making an absolute fortune at the expense of American consumers,” and also said foreign countries “extort unreasonably low prices from US drugmakers” in a form of “global freeloading,” adding that he had instructed US Trade Representative (USTR) to make this issue a priority in future trade talks.
Responding to the idea that getting other countries to pay more for drugs would result in lower prices in the US, Paul Ginsburg, a professor of health policy at USC and the director of the USC-Brookings Schaeffer Initiative for Health Policy, said it would have no such effect and simply raise pharma company profits.
Despite the combative rhetoric, pharma share prices rose pretty much across the board after the comments, suggesting the investors aren’t worried about the impact of the proposals.
Nevertheless, the US pharma lobby group PhRMA said the proposals were a mixed bag.
““These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain.,” commented Pharmaceutical Research and Manufacturers of America (PhRMA) CEO Stephen Ubl.
“While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients’ access to innovative treatments,” he added citing in particular changes to Medicare Pat D and Part B.
“After negotiations, medicine prices increased just 1.9% last year, below the rate of inflation, and yet patients’ out-of-pocket costs continue to skyrocket, continued Ubl.