Trump Speech Hits Drug Price Concerns as Congress Charts Own Path

Among the broad array of issues President Trump vowed to address in his State of the Union speech were lowering overall healthcare costs and the cost of prescription drugs. Trump didn’t ask Congress to pass any specific legislation on drug pricing, instead calling on lawmakers to support his efforts to end what he called global freeloading and improve price transparency.

“It is unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place,” he said.

While the Trump administration is likely to keep pushing a plan to base US prices on what other countries pay, among other proposals, and newly ascendant House Democrats favor bold approaches to the issue, the odds for major legislative changes in the next year or two are slim.

To be sure, some relatively modest bipartisan reforms could succeed.  Leaders of key Senate and House healthcare committees are concerned about drug costs and are encouraging generic drug development. The two parties could agree, for example, on bipartisan proposals to prevent brand-name drug companies from paying potential generic competitors to delay their product’s market entry (S 64) or blocking the sale of samples that generic drug makers need to get their products approved.

A group of senators including Senate Finance Committee Chairman Charles Grassley, R-IA, on Tuesday reintroduced a bipartisan bill (S 974) that would make it easier for generic drug companies to access the samples they need to create new copycat products. Lawmakers say they hope to move it this year after falling just short of doing so last year.

Agreement on more ambitious proposals will be difficult but possible. Key Democratic priorities include allowing the Medicare Part D program to negotiate drug prices, permitting importation of less-expensive drugs from abroad and basing US drug prices on the prices paid in other major global economies.

Like President Trump, Grassley, has criticized rising drug prices and may align with Democrats on some issues. Grassley is opposed to letting the federal government negotiate drug prices and to the Trump administration’s proposal to base US prices on what other countries pay. However, he has teamed with Democrats to sponsor legislation (S 61) allowing importation of certain drugs from Canada and wants to step up oversight of drug pricing.

Congress and President Trump last year enacted legislation (PL 115-262 and 115-263) to ban “gag clauses” that stop pharmacists from telling customers when they could save money by paying for a drug outside their plan rather than using their insurance benefits. The Trump administration is also aggressively pursuing a number of regulatory reforms aimed at reining in drug prices, including last week’s proposed rule that would restrict the amount of rebates that drug makers give to pharmacy benefit managers in government-run health care programs.

Congress may also consider revising or reversing changes to Part D coverage gap (the donut hole) made by February 2018 budget legislation (PL 115-123). That measure closed the donut hole one year earlier (in 2019) than scheduled, saving seniors and health insurers money. Because much of the cost shifted to brand-name drug makers, they are urging Congress to roll back the change. Senior groups and insurers are certain to push back, but how lawmakers respond remains to be seen.

So it’s likely voters will have a similar outlook on prescription drug costs entering into the 2020 elections as they did last year, when large majorities of people polled by the nonpartisan Kaiser Family Foundation favored major reforms, including allowing the government to negotiate lower prices for people on Medicare (92%).

Geoff Manville
by Geoff Manville

Partner, Mercer’s Law & Policy Group

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