With no chance of fulfilling his pledge to repeal and replace Obamacare before Election Day, President Donald Trump is playing up his efforts to lower drug prices.
“With what I am doing in the fight with the Drug Companies, drug prices will be coming down 50, 60, and even 70 per cent. The Democrats are fighting hard to stop me with big ad buys, plus. Likewise, Big Pharma. FAVORED NATIONS AND REBATES ARE BRINGING PRICES DOWN NOW. We will win!,” the President tweeted on Wednesday morning.
Facts First: It’s not true that Trump’s measures on favored nations and rebates are bringing prices down now – mainly because they haven’t gone into effect yet. And whether drug prices will be cut by half or more in the future is hard to predict.
Taming high drug prices
High drug prices have long been one of Americans’ chief health care complaints, and Trump has long promised to do something about it. His administration released a 44-page blueprint of his vision in May 2018, though most of the measures remain only on paper.
Trump has claimed victory in lowering prices in the past, though the data backing up the assertion was shaky. During his State of the Union address in February, he harkened back to a statistic he had mentioned the year before – that the cost of prescription medications went down for the first time in 51 years. The President was citing the 12-month change in the consumer price index for prescription drugs for December 2018. However, the data bounces around a lot. Last month, it was up 1.7%.
It’s surprisingly hard to answer whether drug prices are rising and by how much. There are many measures, but few, if any, that capture the full spectrum of medications, which include generic, brand name and specialty drugs, and cover those given in a hospital or doctor’s office and those purchased at the pharmacy. Also, there’s the list price of the prescription drug and the net price, which takes into account various discounts.
Here’s one way to look at the issue – through the lens of brand name drugs, which make up only about 10% of prescriptions written, but 80% of the dollars spent. While list prices for brand name drugs are still on the rise, the rate of growth has been declining for at least the past four years, according to SSR Health, which captures price changes for about 1,000 brand name medications.
A similar trend is happening when one examines the list prices of both brand name and less-expensive generic drugs. GoodRx, which follows several thousand brand name and generic medications, found that manufacturers hiked prices on 857 drugs by an average of 6.8% in the first six months of this year. That compares to 933 medications rising an average of 7% over the same time last year, according to the website, which provides cost comparisons and consumer discounts. The number of drugs and rate of price growth also slowed between 2015 and 2019.
In his tweet Wednesday, the President refers to two of four executive orders he issued late last month, which resurfaced a kitchen sink of controversial proposals that have advanced little during his term.
The favored nations measure, which has not yet been released by the White House, generally calls for setting Medicare reimbursement levels for certain drugs on their cost in other countries – an idea that runs counter to Republicans’ allegiance to the free market system. The administration first outlined an International Pricing Index proposal in October 2018.
Trump said at the signing that he would hold onto the order until Aug. 24 to give drug makers time to present their ideas for reducing costs. But a planned meeting at the White House in late July never took place, and it remains to be seen what Trump will do with the measure.
The second order calls for effectively banning drug makers from providing billions of dollars in rebates to pharmacy benefit managers and insurers, a radical change in the way many drugs are priced and paid for in Medicare and Medicaid. Instead, drug companies would be encouraged to pass the discounts directly to patients at the pharmacy counter.
The administration had to back down from this effort last summer, in part because it would have likely raised Medicare premiums.
Industry groups fight back
Industry groups, including those representing drug manufacturers and pharmacy benefit managers, have slammed various proposals that are unfavorable to their members. They launched ad campaigns shortly after the executive orders were unveiled.
Trump’s signing of the executive orders allowed him to draw attention to drug prices, albeit briefly, even as the nation fights the coronavirus pandemic. While his administration has rolled out many proposals aimed at tackling the problem, it remains to be seen whether any will actually have an impact.