President Trump plans to make drugs affordable again
By Sally C. Pipes
During his State of the Union address, President Trump pledged to drive down drug prices.
That’s a worthy goal. Fortunately, the Trump administration is already pursuing it in ways that protect patients and encourage research and development. Many strategies that candidate Trump proposed on the campaign trail would have done more harm than good.
Candidate Trump wanted to repeal Medicare Part D’s “non-interference clause,” which prevents the federal government from negotiating drug prices with manufacturers. Private insurers currently handle negotiations for Part D, a prescription drug program that benefits about 42 million Americans.
Such interference wouldn’t result in lower prices. Private insurers already extract discounts from drug companies. Giving federal bureaucrats the power to negotiate prices “would have a negligible effect on Medicare drug spending,” according to the nonpartisan Congressional Budget Office.
Federal negotiators could only obtain lower prices by establishing a national formulary of preferred drugs. That would make many medications completely inaccessible for seniors.
The U.S. Department of Veterans Affairs uses such a formulary. As a result, veterans don’t have access to nearly 20 percent of the most commonly prescribed drugs under Medicare Part D.
Candidate Trump also advocated for drug price controls.
Imposing such caps would hinder efforts to develop breakthrough medications, as pharmaceutical companies would struggle to justify research expenditures. Nations that rely on price controls to artificially keep prices low are free riding on U.S. patients, who fund the bulk of medical research and development. The average new medicine costs about $2.6 billion to bring to market.
The Trump administration jettisoned these counterproductive policy proposals. It’s now pursuing measures that curb costs while improving the quality of American health care.
Consider the president’s reauthorization of PDUFA, a 1992 law allowing the FDA to charge pharmaceutical companies for reviewing drug applications. This extra revenue enables the FDA to review applications faster. As a result, more medications make it to market sooner — opening up options for consumers and lowering prices through competition.
Another promising step is a proposed rule from the Centers for Medicare and Medicaid Services. The rule would curb price gouging by pharmacy benefit managers, or PBMs. These middlemen negotiate with drug manufacturers to obtain discounts for insurance companies.
PBMs use their buying power to extract rebates from drug makers. From 2010 to 2015, the value of those rebates increased by more than 20 percent annually. But patients picking up their prescriptions often don’t benefit from these rebates.
The rule would require PBMs to pass along some of these rebates to Medicare patients. Beneficiaries could pocket more than $10 billion in total savings.
The biggest reforms are taking place at the FDA. Commissioner Scott Gottlieb has endorsed “adaptive” clinical trials, which allow researchers to adjust experimental drug tests based on real-world evidence. This speeds up the research and development process and results in savings for drug companies, more drug applications for the FDA, and more options for patients. More drugs on the market force manufacturers to compete on price.
On the campaign trail, candidate Trump promised he would deliver lower drug prices. One year into his presidency, he’s on his way to achieving that goal — thanks to his abandonment of statist price controls and embrace of free-market reforms.
Sally C. Pipes is president, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her next book, “The False Promise of Single-Payer Health Care,” will be published this spring. Follow her on Twitter @sallypipes.
The viewpoints expressed above do not necessarily reflect those of The Independent.
Articles related to “President Trump plans to make drugs affordable again”
Trump proclamation threatens scientific potential of Grand Staircase
On President Donald Trump and what this election proved to me
How to submit an article, guest opinion piece, or letter to the editor to The Independent
Do you have something to say? Want your voice to be heard by thousands of readers? Send The Independent your letter to the editor or guest opinion piece. All submissions will be considered for publication by our editorial staff. If your letter or editorial is accepted, it will run on suindependent.com, and we’ll promote it through all of our social media channels. We may even decide to include it in our monthly print edition. Just follow our simple submission guidelines and make your voice heard:
—Submissions should be between 300 and 1,500 words.
—Submissions must be sent to editor@infowest.com as a .doc, .docx, .txt, or .rtf file.
—The subject line of the email containing your submission should read “Letter to the editor.”
—Attach your name to both the email and the document file (we don’t run anonymous letters).
—If you have a photo or image you’d like us to use and it’s in .jpg format, at least 1200 X 754 pixels large, and your intellectual property (you own the copyright), feel free to attach it as well, though we reserve the right to choose a different image.
—If you are on Twitter and would like a shout-out when your piece or letter is published, include that in your correspondence and we’ll give you a mention at the time of publication.
