Sector News

Trump targets 'global freeloading' with push to match cheaper overseas drug prices

October 26, 2018
Life sciences

It’s no secret that drug prices are higher in the U.S. than in other countries, and on Thursday, the Trump administration rolled out its latest attack on drug prices. The target this time? “Global freeloaders,” as the president put it in an afternoon press conference.

The administration is advancing an “international pricing index” to push down prices for certain Medicare drugs until they’re comparable to those in other developed countries. The reductions would phase in over five years and apply to Medicare Part B, which covers drugs administered in doctors’ offices.

Those drugs include expensive cancer treatments and rare disease therapies that many drugmakers, including pharma giants such as Roche, rely on for sales. Big price cuts in the U.S. would put a major crimp in revenues and slash growth.

Ahead of the speech, Health and Human Services Secretary Alex Azar tweeted a link to a new report that “provides troubling insight into how the current international drug pricing system has put America in last place.” For 27 drugs that account for the most in Medicare Part B drug spending, prices in the U.S. are 180% higher, on average, than they are in countries with similar economies, the report concluded.

At the press conference Thursday, President Donald Trump said the U.S. has been “disrespected for too long and in too many ways.” He said it’s “unimaginable” such pricing discrepancies haven’t yet been addressed, and that his proposal will both reduce drug prices and help patients.

In a note Thursday morning, Bernstein analyst Ronny Gal wrote that such “ideas have been around for a while” and it remains to be seen just how committed the administration is to making changes. But for the drug industry, such an index would be viewed as “outright antithetical to their interests,” he noted.

Still, Gal wrote that the news “should be taken in stride” because pharma has “substantial clout” in Washington. Plus, the Trump administration has traditionally negotiated by “setting a sharp first position and negotiating some of it away.” And with elections less than two weeks away, politics is one driving force behind the proposal.

“Afterwards, with a new Congress, a lot of things can happen,” Gal wrote.

The latest proposals follow the Trump administration’s May pricing blueprint rollout. In that plan, the administration lined up ideas that could boost pricing negotiations and competition for drugs, plus provide incentives for lower list prices and to reduce out-of-pocket costs for patients.

The Centers for Medicare and Medicaid Services has since rolled out a plan to allow Medicare Part B plans to implement step therapy for new patients—which forces them to try lower-cost alternatives first—and negotiate prices with drugmakers. HHS, for its part, is pushing for drug prices in TV ads, a proposal opposed not only by pharma but by the ad industry. And at the FDA, in another effort to lower drug prices by stepping up competition, regulators are approving a record number of generic drugs.

By Eric Sagonowsky

Source: Fierce Pharma

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