On Monday, HHS Secretary Alex Azar presented details of the White House’s prescription drug plan that was unveiled in a Rose Garden ceremony last Friday attended by NAHU CEO Janet Trautwein. Azar reiterated the issues that their blueprint seeks to address: high list prices, overpaying in government programs, high out-of-pocket costs, and what they have termed “foreign-government freeloading.” Azar also restated the means that they will use to reduce the costs of pharmaceuticals: improved competition, lowering out-of-pocket costs, enhanced negotiation, and incentives for lower list prices. NAHU was among the select group of stakeholders invited to participate in Azar’s address and will continue to advocate on behalf of brokers and your clients throughout this process.
Azar led his remarks by indicating that a primary objective for the administration will be to seek improved negotiation where they currently have flexibility in the retail drug program and Medicare Part D, and to implement new negotiation methods in physician administered drugs and Part B. HHS is expected to issue a request for proposal that would allow private sector companies to negotiate the costs of physician-administered drugs. The proposal calls for applying Medicare’s competitive acquisition program that is used for acquiring Part B drugs, allowing private companies to negotiate costs of physician-administered drugs. Additionally, they plan to shift many pharmaceuticals to Part D to improve the ability to negotiate the prices of these drugs.
Secretary Azar also spoke to the issues with competition, particularly with regards to generic medicines. He noted that the administration plans on calling attention to the practice of pharmaceutical companies abusing the system by blocking access to samples, and hiding behind rules under the Food and Drug Administration. He further said that they would not be pursuing any “gimmicks” of drug re-importation from Canada to help increase competition, calling their market too small to have any meaningful impact on prescription prices in the U.S.
With regards to out-of-pocket costs, he noted that the administration would be calling for greater transparency and allowing consumers to have full disclosure on their out-of-pocket expenses at pharmacies. He noted that the Centers for Medicare and Medicaid Services (CMS) would be sending a letter to all Medicare Part D plan sponsors regarding the practice of pharmacy benefit managers setting contracts with pharmacies that prevent pharmacists from telling consumers when they can get a better deal on a drug by paying cash than by using insurance, specifically noting that the administration would consider such behavior unacceptable.
Finally, Azar highlighted immediate steps the administration would be taking on the list prices of pharmaceuticals. He specifically spoke to a provision of the ACA that established a cap on the penalty that drug companies had been paying when they raised prices faster than inflation and said that President Trump would be urging Congress to pass legislation to overturn this cap. Other initiatives include modifying Medicare’s Average Manufacturer Price formula for determining the price it pays for drugs, reforming the Pharmacy Benefit Manager (PBM) system, forbidding remuneration from pharmaceutical companies, such as by eliminating rebates, and evaluating transparency and disclosure in direct-to-consumer advertising.
NAHU applauds the Trump Administration for taking these initial steps in reducing the cost of pharmaceuticals, which will in turn help to reduce the cost of healthcare and health insurance. NAHU identified the high cost of pharmaceuticals in our Healthcare Cost Drivers white paper, where we identified that the factors driving the increases in pharmaceutical costs as: increasing utilization of prescription drugs; newer, higher-priced drugs replacing older, less-expensive drugs; fewer manufacturers and less competition, and manufacturer price increases for existing drugs. We further called for addressing these in our overarching position paper for reforming the nation’s healthcare system, Access, Choice and Affordability.