Government pricing-setting is an unorthodox idea among Republicans. But the Trump administration has made a bold move in that direction with plans to limit certain Medicare payments to what other countries pay for high-cost prescription drugs.
President Trump made his first public appearance yesterday at the Department of Health and Human Services to roll out the proposal, which he explained in typical Trumpian terms by saying it would resolve a “rigged” system in which the United States pays more than other nations for medicines.
“Americans pay more so other countries can pay less,” Trump said. “It’s wrong. It’s unfair.”
Of course, the proposal is a lot more nuanced and detailed than the way the president described it. But it represents fascinating policy coming at a fascinating time — two weeks before a high-stakes election in which Democrats are capitalizing on health care to give them an advantage over Republicans in seizing the House majority.
Democrats are generally keen on the idea of the government helping to set drug prices, and they’ve blasted Trump for abandoning his election promise of allowing Medicare’s prescription drug program (known as “Part D”) to directly negotiate lower prices with manufacturers. Conversely, Trump surprised some in the GOP when he backed the idea on the campaign trail, since Senate Republicans blocked legislation to this end back in 2007.
Trump's new proposal doesn’t go quite so far, but it could save the government some cash by reducing its prescription drug payments dispensed through another part of Medicare, its “Part B” program that pays for doctors visits by seniors and the medicines dispensed there. Administration officials are touting it as a way to introduce more market-based competition into the Part B program, achieve savings for the government and put downward pressure on drug prices overall.
“Nobody should question the president’s resolve to get drug prices down and improve what we are paying in our drug price programs,” Health and Human Services Secretary Alex Azar told reporters yesterday.
The proposal centers on this: Right now, Medicare pays doctors the average U.S. sales price of a drug. But the experiment being proposed by the administration would peg payments to a new international index of drug prices in other countries with similar economies, which would have the effect of lowering the price Medicare pays in the United States.
The trial — laid out by the Centers for Medicare and Medicaid Services in a notice of advanced rulemaking — would be carried out through CMS’s innovation center. Over a five-year period, prices for most drugs in Part B would be gradually and increasingly pegged to the new index, saving Medicare an estimated $17.2 billion. The experiment would be confined to just 50 percent of the country, but it's unclear which geographical parts would participate.
We should note the scope of this plan is relatively limited and won't necessarily decrease overall drug prices by huge margins. It would apply only to Medicare Part B, which accounts for just 11 percent of all Medicare drug spending and just 3 percent of all Medicare spending. And Congress would have to approve legislation to make the new payment index permanent and apply it to all payments.
But the plan does signify the administration is serious about taking action on drug prices. The Obama administration made a similar effort, which it ultimately abandoned under pressure from the drug industry.
Rachel Sachs, an associate professor of law at Washington University School of Law in St. Louis, questioned why the Trump administration would echo a move by its predecessors.
“It’s very interesting that the administration has decided to bring back a proposal that was roundly criticized and ultimately abandoned by the Obama administration,” Sachs said. “It will be interesting to see whether they can withstand the kind of criticism that the Obama administration took from many sides of this issue and if not, it’s a sign that this administration is business as usual. If so, we won’t know for several years.”
Even so, most Democrats weren’t willing to give ground to Trump on the issue, instead questioning the timing and focusing on his administration’s moves to undermine protections for patients with preexisting conditions.
“It’s hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election when they have repeatedly advocated for and implemented policies that strip away protections for people with pre-existing conditions,” top Senate Democrat Chuck Schumer (D-N.Y.) said in a statement.
Rep. Peter Welch (D-Vt.) said he was “skeptical” about the proposal.
“For two years, and on the campaign trail, the president spoke emphatically about price gouging,” Welch told The Health 202. “But he's had two years and there’s been no progress. This is two weeks before the election, and health care is a big issue. Count me skeptical.”
Welch said the “embrace of reference pricing” has some potential. “It’s a narrow approach that would provide some potential relief but not until 2020, and only for those folks who are getting their medication administered in doctor’s offices or hospitals,” Welch said. “His embrace of reference pricing is in fact a potentially effective way, but it has to be implemented comprehensively and immediately.”
Sen. Richard Durbin (D-Ill.), for his part, said he was "pleased" with the administration's move:
For years, I've been pushing to lower health care costs by allowing Medicare to negotiate drug prices. I’m pleased that @SecAzar listened to me and fellow Democrats, and today’s announcement is a step in the right direction. https://t.co/JFZsN7rmNc— Senator Dick Durbin (@SenatorDurbin) October 25, 2018
In a statement, House Energy and Commerce Chair Greg Walden (R-Ore.) and House Ways and Means Committee Chair Kevin Brady (R-Tex.) applauded Trump. But they didn't explicitly comment on the proposal.
“We commend the president for remaining steadfast in his commitment and appreciate [Azar’s] efforts to encourage lower drug costs for patients,” they said in a joint statement. “We will continue working with President Trump and his administration to make good on his promise to the American people."
Pharmaceutical Research and Manufacturers of America, the main trade group representing drugmakers, compared Trump's plan to advancing a “socialized” system.
“The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation,” PhRMA chief Steve Ubl said in a statement. “These proposals are to the detriment of American patients . . . The proposed Medicare Part B model would jeopardize access to medicines for seniors and patients with disabilities living with devastating conditions such as cancer, rheumatoid arthritis and other autoimmune diseases.”
The Biotechnology Innovation Organization, a top trade group representing biotechnology drugmakers, said such a plan “puts America's patients last” and “will severely chill investment in new cures and therapies for America's seniors.”
Both Trump and Azar say the plan puts the United States on a more equal footing with other countries, which pay significantly less for drugs. The United States is the biggest funder of research and development in the pharmaceutical sector yet lacks the bargaining power to bring down prices — unlike in countries with public health-care programs.
“For some drugs we are paying upwards of 300 or 400 percent, and in some instances we pay 700 percent more than other countries do,” Azar told reporters after Trump’s address. “President Trump asked us to fix this problem, and here’s how we plan to do it.”
Besides the new index, CMS is seeking a few other changes. The agency wants to establish a system inside Medicare in which drugs would be sold to vendors instead of directly to doctors and hospitals. It would also remove incentives for doctors to prescribe more expensive drugs by paying them a flat fee for storing the medications instead of a fee based on a percentage of the drug’s price.
Slashing drug prices is a major Trump goal after the president kicked off the effort at a Rose Garden ceremony in May. Trump has since tweeted at drug companies not to raise their prices, and his administration has moved twice in October to lower drug prices in other ways.
Trump signed a bill banning “gag clauses” that prohibit pharmacists from telling patients when they could save money by paying cash or trying a cheaper alternative medicine. And HHS has proposed a rule requiring companies to list in television ads the price for a 30-day supply or course of treatment for drugs they are trying to sell.
No single thing the administration has done will have a major impact on drug prices on its own. But you’ll hear officials argue that together, all these actions will eventually start moving the needle.
Paulina Firozi contributed to this report.
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AHH: Altria Group, the tobacco manufacturer that also makes Marlboro cigarettes, announced it will stop selling its flavored e-cigarettes and at least temporarily discontinue the sale of its pod-based e-cigarettes, a response to growing concerns about the increase in teen vaping.
Altria said it "would not put the vaping products back on the market until they get federal clearance or ‘the youth issue is otherwise addressed,’ ” our Post colleague Laurie McGinley reports. “That means a halt in sales of MarkTen Elite and MarkTen pod-based products. Those pods are essentially cartridges that hold liquids that are turned into vapor before being inhaled. Such pods have become increasingly popular because of their portability and ease of use.”
The company also said it would discontinue its sale of e-cigarette flavors for it's "cig-a-likes" e-cigarettes other than tobacco, menthol and mint until it gets approval from the FDA. Altria also said it would support federal legislation to raise the minimum age for the purchase of any tobacco product to 21.
“Altria’s move comes at a pivotal moment as the FDA struggles to rein in what Commissioner Scott Gottlieb has declared ‘an epidemic’ of underage use of e-cigarettes,” Laurie writes. “In recent months, Gottlieb has warned manufacturers that he is considering prohibiting or restricting the sale of flavored vaping products, which are thought to be especially appealing to younger people. He also has signaled the possibility of banning online sales of e-cigarettes.”
OOF: The former acting chief of staff to Democrat Rep. Henry Cuellar of Texas has filed a complaint saying that she was fired last week for being pregnant.
“Kristie Small submitted a request for counseling Monday with the Office of Compliance, the body that handles discrimination and harassment complaints in Congress, after she was terminated as Cuellar’s acting chief of staff last week,” our Post colleague Elise Viebeck reports. “Small said that when she asked the Texas lawmaker to meet to discuss plans for her maternity leave, he told her she was on a 90-day ‘probation period’ and set two new markers for her performance that he later claimed she had failed to meet.”
Such a termination would be in violation of federal law, Elise explains. The Pregnancy Discrimination Act, according to the Equal Employment Opportunity Commission, states that a woman “cannot be fired, rejected for a job or promotion, given lesser assignments, or forced to take leave” because of pregnancy.
“I knew I was doing an excellent job,” Small told Elise. “All of this started happening in response to my maternity-leave email. It’s 100 percent clear to me that had I not been pregnant, I would still be in this job.”
In a statement, Cuellar’s office defended Small’s firing. “The Office of Representative Cuellar considers internal personnel matters confidential and will not comment publicly on Ms. Small’s allegations at this time, except to say that the office values its employees and conducts all personnel matters in compliance with the congressional Accountability Act and applicable House Rules. All actions taken with respect to Ms. Small’s employment were in compliance with the law and House Rules,” the statement read.
OUCH: Fewer than four out of ten adults across the country got a flu shot last winter, the lowest rate of vaccination in seven flu seasons, our Post colleague Lena H. Sun reports. That low rate probably contributed to the fact that last flu season was one of the deadliest in decades.
Last season, 37.1 percent of adults was vaccinated, according to reports released yesterday by the Centers for Disease Control and Prevention. That’s a drop of 6.2 percentage points from the flu season before last.
“That’s the lowest rate for adults 18 and older since 2010-2011,” Lena writes. “For many years, overall vaccination coverage has remained flat, with less than half of the U.S. population getting vaccinated. But the most recent drop has caused concern among experts.”
“That’s huge. It’s a striking inflection down from the previous year,” William Schaffner, an infectious-diseases expert at Vanderbilt University and medical director of the National Foundation for Infectious Diseases, told Lena.
— The Food and Drug Administration is set to approve a new potent opioid to be used in hospitals and emergency rooms, despite objections from the head of the expert panel that reviewed the drug.
An FDA advisory committee recommended on a 10-to-3 vote approval of the 30-microgram pill form of sufentanil, a potent painkiller often used after surgery, our Post colleague Lenny Bernstein reports. “The FDA usually follows the guidance of those committees, which are comprised of experts on various drugs and medical devices,” Lenny writes. “But in this case, the chairman of the committee, who missed the meeting because he was speaking at a medical conference in San Francisco that day, has publicly urged the agency to reject the drug application because of the epidemic of opioid overdoses in the United States.”
The committee chair, Raeford Brown, who is a professor of anesthesiology and pediatrics at the University of Kentucky, expressed his concern in a letter to FDA Commissioner Scott Gottlieb. In a rare move, he also made his opposition public.
“The drug is five to 10 times more potent than pharmaceutical fentanyl,” Lenny writes. “The tiny pill — just three millimeters in diameter — is all but certain to be diverted to the streets, he said. Brown also said the safety and effectiveness of the new drug has not been fully proven.”
“We made [the pill] small for two reasons: You want it to rapidly dissolve and we didn’t want to reflexively create a lot of saliva production," which could interfere with the drug’s effectiveness, said Pamela Palmer, co-founder and chief medical officer of the company behind the pill AcelRx.
Health and Human Services Secretary Alex Azar on speculation that he could be on President Trump's short list to replace Attorney General Jeff Sessions: "I am in my absolute dream job and just loving every minute of it" https://t.co/SIcXhHdsBv pic.twitter.com/gmLEKltkKb— This Week (@ThisWeekABC) October 25, 2018
— HHS Secretary Azar dismissed the idea that he would leave the agency for another in the administration, responding to a question about a Wall Street Journal report earlier this month that said Azar was on a potential shortlist to replace Attorney General Jeff Sessions.
“I hope you can see from the announcement that I made today with the president of the United States and my commitment on these issues that I am in my absolute dream job and just loving every minute of it,” Azar said in an interview with ABC News.
— Drugmaker Amgen announced this week it would slash the price of its whopping $14,000 a year cholesterol drug, Repatha, to $5,850 per year, buckling under public pressure to reduce skyrocketing costs.
The Trump administration, as we saw yesterday, has made health care a focus of its agenda, and has frequently talked about the list price of drugs, the New York Times’s Katie Thomas reports.
“But few consumers pay the list price,” she writes. “In recent months, several major manufacturers have bowed to government pressure, putting temporary halts on planned price increases, although few have lowered list prices. The drug makers have said that’s because they are beholden to intermediaries, like the pharmacy benefit managers and distributors, who take a percentage of their pay from a drug’s list price, creating an industrywide incentive to keep list prices high.”
“It’s unclear whether Amgen’s decision to discount Repatha’s price signals an industry shift, or whether it is an isolated move by a company to rescue what had once been touted as a potential blockbuster,” Katie adds.
— Pharmaceutical giants Merck and Bristol-Myers Squibb saw a better-than-expected profit in the third quarter, with profits rising because of the high demand for their cancer immune-oncology treatments, Reuters’s Michael Erman and Manas Mishra report.
“Bristol-Myers pioneered cancer immunotherapy with Yervoy and later its blockbuster drug Opdivo,” Michael and Manas write. “But Merck & Co’s (MRK. N) rival treatment Keytruda has seized a dominant position in lung cancer — the most lucrative oncology market — and Bristol-Myers’ shares have suffered.”
— In an op-ed published in The Post, Caitlyn Jenner criticized Trump following reports that his administration is considering changing the way it defines and treats transgender people under the law. Trump earlier this week confirmed an ongoing debate within the administration about whether to define general as a biological fact determined at birth.
In the op-ed, Jenner said she was “wrong” about Trump. “The reality is that the trans community is being relentlessly attacked by this president.”
Jenner, a transgender rights advocate and celebrity, is a Republican who voted for Trump in 2016.
“Following Trump’s election as president, I saw fertile ground for change within the Republican Party on LGBTQ issues,” she wrote. “Trump was the first Republican presidential candidate to claim to support this valuable, vulnerable community … I believed I could work within the party and the Trump administration to shift the minds of those who most needed shifting.”
But she said Trump “has shown no regard for an already marginalized and struggling community.”
— And here are a few more good reads:
- HHS Secretary Alez Azar speaks about the Medicare drug pricing proposal at the Brookings Institution.
- The American Enterprise Institute holds an event on postelection analysis for 2018 and beyond on Nov. 8.
How preexisting conditions became a central issue ahead of the 2018 midterm elections
Progressive D.C. Council member and her opponent spar over paid family leave law: