Source: U.S. Department of Health & Human Services
Is American Patients First good for retail pharmacies?
President Donald Trump on Friday unveiled his blueprint American Patients First program, designed to lower drug prices, a plan that seemed to have been expected if not embraced by the pharmaceutical industry.
“We commend the Trump Administration’s focus on reducing the cost of prescription drugs, and we agree more can and needs to be done,” said CVS in a statement.
The 39-page proposal included more than 50 initiatives designed to increase competition for medicines, reduce regulations and rework incentives for all players in the pharmaceutical industry.
Among the proposals:
- Giving Medicare’s private prescription drug plans, known as Part D, “greater flexibility” in negotiating lower prices.
- Ending a gag rule insurers use to keep pharmacists from telling patients how they save money by paying list price instead of an insurance co-payment.
- Speeding up FDA approvals of over-the-counter medicines.
- Pressuring other developed countries to loosen price restrictions and lift the prices of brand-name drugs, with the expectation that pharmaceutical companies would then lower prices here in the U.S.
- Considering ending rebates that pharmacy benefit managers (PBMs) receive from drug makers in negotiating drug prices for insurers and large employers.
- Consideration by the FDA of requiring drug makers to disclose prices in television ads.
The plan excludes many of the ideas Mr. Trump had called for on the campaign trail and pushed by Democrats, notably allowing Medicare to negotiate directly with drug manufacturers. The more than 57 million Americans in Medicare would present huge leverage in negotiating prices versus insurers, but drug companies have lobbied hard to prevent government involvement. The plan indicates that few regulations will be imposed over the prices manufacturers charge. Americans also won’t be able to import low cost medicines from abroad.
David Maris, an analyst at Wells Fargo & Co., told Bloomberg the plan marked “a first shot across the bow.”
“The industry is among the most profitable of any industry in the U.S. and as such probably has room to give,” Mr. Maris said. “If it doesn’t reform itself, it will be reformed and this is the beginning of that reform.”
- American Patients First – The U.S. Department of Health & Human Services
- President Donald J. Trump’s Blueprint To Lower Drug Prices – The White House
- CVS Health Statement on Trump Administration Initiative to Reduce Drug Costs – CVS Health
- Trump Promises Lower Drug Prices, but Drops Populist Solutions – The New York Times
- Big Pharma Gets a Big Win From Trump – The Atlantic
- Trump lays out his vision for lower drug prices – CNN
- Trump Promises Aggressive Campaign to Cut Drug Prices – Bloomberg
Discussion Questions
DISCUSSION QUESTIONS: Do you see the American Patients First program being a positive or negative for the pharmacy business at retail? What aspects of the plan do you like? What may be missing?
Poll
BrainTrust
Cynthia Holcomb
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Dave Wendland
Vice President, Strategic RelationsHamacher Resource Group
Despite his glowing assessment of his own plan, Trump’s plan will have little impact on the drug and pharmacy businesses. If he really wanted to tackle soaring drug costs in the U.S., he would have let Medicare directly negotiate drug prices. And urging other countries to raise their drug prices is not reality. This plan may, in his own mind, give Trump something to crow about but it will have little impact on consumers, pharmacies and drug companies.
I applaud the President’s intent and commitment. Although it could go even farther. As a first step, the elements favorably address escalating prescription prices and provide more access to consumer healthcare products (over-the-counter medicines). On the Rx side, patients may increase adherence to their drug regimen which is good for the retail side of the equation and the overall health of our nation. Moving products more quickly through the FDA for approval will also bode well at retail and for consumers who want to personally manage their journeys to stay well, get better, live vitally with chronic conditions and/or care for loved ones.
There are some sensible measures, including the banning of the gag rule. Quite a few states have already enacted legislation to end this, but if brought in at a federal level it will ensure that pharmacists can give proper advice to patients. This includes helping people find the most economical solution.
I would go one step further. I’d open up the whole market, including allowing people and businesses to reimport drugs from other countries if they desired.
A further step would be to reduce the burdensome process of FDA approval which is extremely costly and adds to the price of drugs. A fairer patent law would also help drug companies recoup their investment more effectively and bring down costs.
Part of the reason drug prices are high is that government intervenes too much, not too little.
The question is, what “proposals” will become reality for what generation? Big pharma is so entrenched in medicine, “a shot across the bow” for instance, into the quagmire known as Medicare means nothing more than a feel-good moment evaporating into the political system. Changing the pharma path will require unraveling a huge enterprise of companies, lobbyists and politicians. Hope springs eternal?
Even recognizing that reforms are needed is a huge step in the right direction. Removing the politics from a health care crisis will take time and leadership, but it must be done if we are to survive as a society. This will happen, but the true question is when. Only time will tell what issues are addressed first, and when the key issues of drug reform and patient communication (clarity) can be fixed.
The drug industry is a classic monopoly situation in that the providers sell patented/proprietary products — and even when they don’t, their marketing tries to make it seem they do — and simultaneously there is a classic moral hazard situation in that buyers expect someone else, i.e. insurers, to pay.
So any plan that “indicates that few regulations will be imposed over the prices manufacturers charge” but instead relies on a mix of incentives, encouragements and conservatives ever-favorite chimera, “reduced regulations,” will accomplish very little.
In some ways retail drug prices are a world-wide blended revenue equation. That same drug that goes for a premium price in the US (negotiated or not) seems to be sold for much lower prices in other countries. The rather poor argument given being that without the US margin, R&D would not be sustainable. Whatever the mechanism (like allowing medicare to negotiate as a start), until the US pricing goes to “world scale,” the American consumer is being taken advantage of, and needs more power to balance this equation.