In spite of what the media may claim, President Donald Trump has made progress on reducing the cost of prescription drugs. Trump and his administration – Health and Human Services Secretary Alex Azar and FDA Commissioner Scott Gottlieb in particular – have prioritized reducing the list prices of expensive medications.
The president has gotten personally involved when drug companies hike the prices of their drugs. Case in point: in July, Pfizer increased the price of 41 drugs by more than 10 percent, the second such price hike in 2018 alone. In response, Trump tweeted the following:
“Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!”
In addition to the president’s personal involvement, his administration has promulgated rules that will shine a light onto the usually-opaque price of prescription drugs.
The Centers for Medicare and Medicaid Services recently formulated a regulation that would require drug manufacturers to include the list price of a drug in direct-to-consumer advertisements for prescription drugs.
“We believe Americans should know which drug companies are gouging consumers and which ones are being good actors for our communities,” Azar said of the regulation.
With the pressure that the administration has placed on list prices, drug manufacturers have tried to deflect attention away from list prices and towards other players in the health care supply chain. Their position is basically that list prices don’t matter because of the rebates and discounts that are negotiated by insurance companies and pharmacy benefit managers.
The Trump administration, however, has seen through this tactic, Azar wrote:
“But Americans know better, because increases in list prices hit their pocketbooks. Each January, many Americans see their insurance deductibles reset, and they have to start over again paying out of pocket — based on list prices — for the drugs they need. This can mean thousands of dollars in drug costs for the 47 percent of Americans in high-deductible health plans. Meanwhile, for especially expensive drugs in Medicare Part D, patients must pay coinsurance, which is calculated as a share of list price.”
There is no doubt that other players in America’s health care delivery system deserve a share of the blame for the maze of incentives that keep drug prices high. But the administration has focused its attention on where the problem starts: list prices that are set by the manufacturers.