The WasteWatcher: The Staff Blog of Citizens Against Government Waste

President Trump's Drug Costs Proposals Coming Soon

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Several times since President Trump took office, he has called for lowering drug prices.  In mid-March, he announced that new policies would be released in about a month, and much of official Washington has been anxiously waiting since then, wondering what the proposals will contain.

On May 2, 2018, Health and Human Services Secretary Alex Azar said before the World Health Care Congress 2018 that his department is working to build on the President’s 2019 budget proposal, but the administration wants to go further.  Congressional staff are supposed to be briefed today and the May 3, Inside Health Policy announced the proposals will likely be released on Tuesday, May 8.

The President has already made some good policy decisions and has offered other proposals that will help to lower drug costs.  Citizens Against Government Waste (CAGW) has long maintained that the best way to reduce drug prices is to encourage competition.  That objective was advanced when the Food and Drug Administration (FDA) approved 1,027 generic drugs in 2017, the greatest number in the agency’s history.  Much more needs to be done to reduce the backlog of generic drug applications, but this is an accomplishment for which the administration should be recognized and proud.

The FDA also made a regulatory change to provide more generic competition through a prioritized approval process for any drug that is off-patent and manufactured by only one company.  This will prevent a future “Pharma Bro,” like Martin Shkreli from jacking up the price of an off-patent drug because there is no competitor.

CAGW was particularly pleased with the change made by the Centers for Medicare and Medicaid (CMS) in the Medicare Part B payment rate for outpatient drugs purchased within the 340B drug discount program.  This program has been misused as a virtual ATM by many hospitals and pharmacies to line their pockets.  Changing the Medicare Part B payment rate from the Average Sales Price (ASP) plus 6 percent to the ASP minus 22.5 percent for certain hospitals will be of great benefit to Medicare beneficiaries and taxpayers, saving $320 million on copayments.  And, it will help return the program to its original intent of helping low-income, uninsured patients get access to prescription drugs.

The President’s Council of Economic Advisors offered many ideas to bring down drug costs, and focused a laser beam on other countries that are lauded by politicians for their “low” drug prices.  But, these countries utilize price controls to keep drug prices down and depend on American taxpayers to pay for pharmaceutical research and development.  The Trump administration acted and negotiated a new trade deal with South Korea to stop the free ride, and is pursuing changes in trade discussions to make sure other countries pay their fair share of the drug research that will lead to lower prices for American consumers.  CAGW agrees that these tactics should be pursued around the world, and that anything that looks like or has the impact of price controls in the U.S. should be assiduously avoided.

These actions will do far more to lower drug prices for Americans than the adoption of importation policies that have been continually offered as legislation in Congress and pushed by members in both political parties.  Imported drugs cannot be certified by the FDA as safe and effective regardless of their supposed origin.

As the administration moves forward with its plans, CAGW urges caution in bringing “modernization” into Medicare Part D.  There has been a misconception that no negotiations occur to lower drug prices in the Medicare Part D program.  We urge the administration to not allow CMS to set drug prices in Medicare Part D or interfere with private-sector negotiation tactics that will inadvertently drive up costs.  Private-sector negotiations among pharmaceutical companies, pharmacy benefit managers, insurers, and pharmacies have done well to make this program successful in keeping costs down and beneficiaries satisfied.

Spending on U.S. medicines increased by only 0.6 percent during 2017, according to an April 2018 IQVIA Institute for Human Data Science report.  This was due to increased generic drug use, larger manufacturer discounts, and more coupon use.  The focus on opioid abuse has helped to suppress dispensing of these drugs by 10.2 percent.

Reducing regulation and implementing policies that allow more competition will go a long way toward lowering drug costs, while keeping the U.S. the leader in drug research and development.  By continuing to pursue these kinds of commonsense policies, the Trump administration will remain on the right track.

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