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May 11, 2018

What to expect from Trump's much-hyped, long-delayed Rx drug speech

Daily Briefing

    By Ashley Fuoco Antonelli, Contributing Editor

    President Trump today is scheduled to give a long-awaited speech outlining a "blueprint" for how his administration plans to tackle rising prescription drug prices.

    Medicare 101: Cheat sheets for Parts A through D

    The latest CMS data show the growth rate for prescription drug spending has jumped from 2.9% in 2017 to 6.6% in 2018—and that's despite scrutiny in recent years from lawmakers and media outlets into price hikes. For many Americans—nearly half according to a recent Kaiser Family Foundation (KFF) Health Tracking Poll—lowering prescription drugs is a "top priority" they want the Trump administration and Congress to address.

    Over the past few weeks, Trump administration officials—including HHS Secretary Alex Azar and FDA Commissioner Scott Gottlieb—have been hinting at various proposals that could be included in the administration's plan. Industry experts and observers also have placed their bets on the policies Trump likely will—and will not—propose during his speech. Based on those hints and predictions, we've compiled a list of the top 4 policy changes Trump's most likely to mention in his speech:

    1. Changes to Medicare Part B

    John Leppard of Washington Analysis, a company that tracks the pharmaceutical industry for investors, told STAT News' Erin Mershon and Ed Silverman that he thinks Trump could propose changes to Medicare Part B—which covers outpatient drugs, including those to treat cancer, rheumatoid arthritis, and other conditions—as a way to constrain rising drug prices and government spending on drugs covered under the program.

    For instance, Leppard said the administration could prohibit drugmakers from increasing prices for drugs covered under Part B by more than the rate of inflation. In addition, Leppard said the administration could change Part B drug formularies and move some costly drugs covered under Part B into Medicare Part D, where insurers have more flexibility to negotiate with pharmacy benefits managers on the prices they pay for drugs.

    Leppard said, "This would change the dynamic," explaining, "If you're a biotech and launching a new drug, you would now have to set a new launch price at something that is more sustainable in the long run."

    2. Bolstering competition

    According to the Washington Post's Carolyn Johnson, an administration official has said Trump's blueprint will include proposals intended to bolster competition in the U.S. drug market by stopping brand-name drugmakers from "gaming [federal] rules" to block generic and biosimilar drugs.

    Gottlieb has repeatedly pushed for such proposals, and recently criticized the "rigged payment scheme" that keeps lower-cost versions of biologic drugs off the U.S. market and leaves patients paying "exorbitant out-of-pocket costs." Experts and observers say Gottlieb's support for reforms to bolster generic and biosimilar competition could indicate they'll be included in Trump's speech.

    3. Making other countries pay more for US-made drugs

    Experts and observers say Trump could propose policies that aim to make other countries pay more for drugs manufactured in the United States, citing Trump's previous calls for an "America first" strategy.

    Experts have cited a draft executive order circulated last summer that reportedly would direct the U.S. Trade Representative to look into U.S. trade agreements that could be revised "to promote greater intellectual property protection and competition in the global market." In addition, the draft order would direct the U.S. Trade Representative to study the differences between prescription drug prices in the United States and other countries. Mershon and Silverman write the draft order "could address the idea that Americans are subsidizing research that helps citizens in other countries."

    4. Allowing Medicare to negotiate prices with drugmakers

    Although Trump in the past has expressed support for allowing Medicare to negotiate directly with drugmakers on prescription prices, The Hill's Peter Sullivan reports that an administration official has said Trump will not propose giving Medicare that authority in his speech. According to Sullivan, the official said, "We're not calling for Medicare negotiation in the way that Democrats have called for."

    However, Trump could propose changes that would give Medicare more limited negotiating power. The official said, "We clearly want to make important changes that will dramatically improve the way negotiation takes place inside the Medicare program."

    Such changes could include shifting more drugs covered by Medicare Part B into Medicare Part D and allowing Medicare Part D insurers to exclude drugs from their formularies, which ultimately could help them to "strike better deals."

    Other proposals?

    Observers and experts largely agree that Trump also may propose changes backed by administration officials that would give states greater authority to address rising drug prices in their Medicaid programs, implement point-of-sale rebates for Medicare Part D beneficiaries, and more.

    But it's the uncertainty surrounding whether Trump—who in the past has gone off-script—might say that has people wondering.

    Mershon and Silverman wrote, "There is another possible version of the speech on everyone's minds: the version in which he rips up his speech or otherwise ventures off script." In such a speech, Mershon and Silverman write that Trump could lend support to proposals he's back in the past, but that don't necessarily have the support of his top health care officials, such as allowing Medicare to negotiate prices directly with drugmakers and importing prescription drugs from Canada.

    However, Ian Spatz, a senior adviser at Manatt Health, told Mershon and Silverman that what Trump says and what actually becomes policy could conflict. "It's like one of the great parlor games—what will the president say and what will really happen, which are two different things," Spatz said.

    Nevertheless, all eyes will be on Trump to see what he says at 2:00 P.M. ET today.

    Medicare 101: Cheat sheets for Parts A through D

    Through the years Medicare has grown more complicated, including private supplemental insurance and prescription drug coverage. Download our cheat sheets to learn how each of the four parts of Medicare works, and why they’re so important for provider organizations:

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