Published: Sun, October 28, 2018
Health Care | By Cedric Leonard

Trump seeks to base Medicare drug prices on lower overseas rates

Trump seeks to base Medicare drug prices on lower overseas rates

Health Secretary Alex Azar said President Trump's bid to tie what the USA government pays for certain Medicare drugs to what other nations pay won't cripple innovation or access to vital treatments, even if the plan is one of Big Pharma's "ultimate nightmares".

The IPI payment model would bring Medicare reimbursement rates for Part B drugs closer to the prescription drug prices observed in the sixteen other developed economies, CMS explained.

Mr. Trump says the plan to peg prices under Medicare Part B to an "international pricing index" will correct a "rigged" system in which Americans effectively subsidize drug innovation and lower costs in nations like Germany, Japan and Canada.

Rather than "divine the value" of a drug, the proposal "respects the fact that pharma voluntarily agreed to sell drugs at discounts elsewhere and we're saying 'give us some of that, '" Azar said at a briefing with reporters after Trump's speech.

Trump said that with this new policy, the USA will finally begin to confront one of the most unfair practices that drives up the cost of medicine in the United States.

"Same company. Same box".

Announcing his plan on Thursday, Trump linked the prices Americans complain about to one of his longstanding grievances: foreign countries the president says are taking advantage of US research breakthroughs.

- The plan would not apply to medicines people buy at the pharmacy, just ones administered in a doctor's office, as are many cancer medications and drugs for immune system problems.

- Don't expect immediate rollbacks.

This isn't the first time Trump has blamed high drug prices on "global freeloaders", and while there's some evidence that they are "free-riding", as one economist put it to Vox, Trump's rhetoric ultimately amounts to misdirection.

Also, Trump's Justice Department is seeking to invalidate the health reform law's provisions governing pre-existing conditions as part of lawsuit being brought by 20 Republican states.

"The world reaps the benefit of American genius", said Trump, who has pledged to lower prescription drug prices.

The proposal focuses on drugs covered under Medicare Part B, which are administered in hospitals, clinics and doctors' offices.

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In some cases, European patients have to pay the difference between the government's reference price and what the company charges for a drug, said University of York's Moreno-Serra.

In those countries, the government health systems directly negotiate with pharmaceutical makers over the price of their drugs. In his remarks Thursday, he combined that with a swipe at foreign trade practices, framing the Medicare proposal as a way to restore fairness for American healthcare consumers.

HHS said the proposed rule would cover most of the drugs in Medicare's Part B, which includes expensive physician administered drugs such as infusions.

Drug pricing expert Peter Bach of Memorial Sloan Kettering's Center for Health Policy and Outcomes called the plan "a pretty substantive proposal" but one that faces "serious political challenges". The proposal won't extend into other common drugs Americans pick up at the pharmacy counter. But that's "quite literally the opposite of what is being proposed". "But we could save more than United States dollars 800 billion, for our seniors, by paying the prices other countries pay".

Democratic leaders on Capitol Hill were dismissive.

The report compares the price paid by Medicare for 27 prescription drugs with the average price paid for the same drugs by countries with similar economic conditions. Senate Democratic Leader Chuck Schumer of NY said "it's hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election".

President Donald Trump says will he take aim at "global freeloading" with his plan, which would run essentially as a pilot program within the Medicare Part B program.

In advance of his speech, HHS released a report that found US prices for the top drugs administered in doctors' offices are almost twice as high as in foreign countries.

But instead of an add-on payment tied to the cost of the drug, providers will receive a fixed payment instead, therefore eliminating the incentive to prescribe a more costly drug.

The 19-page HHS report looks specifically at drugs purchased and dispensed by doctors themselves, under Medicare's Part B program.

"Something has to change in how Medicare pays for physician-administered drugs", Azar said at the Brookings Institution think tank in Washington.

The department says overall savings to USA programs like Medicare and to patients would total $17.2 billion over five years.

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