- The Trump administration released a new report Monday touting the "unprecedented number of actions" it's taken to curtail rising drug prices, seemingly pushing back against skepticism that its blueprint will result in transformative changes to the current system.
- In particular, the report highlights the decisions by 15 drugmakers to cancel, freeze or otherwise roll back planned drug price increases since the administration released its blueprint 100 days ago. While some recent actions, such as Merck & Co.'s move to reduce list prices for several low-earning medicines, are notable concessions, the true test will come in January, when the industry typically enacts new price hikes.
- The Department of Health and Human Services (HHS), which issued the report, also signaled that it sees a "great deal of room" for Congress to pass drug pricing legislation, and indicated it has sent draft language to the Hill on potential legal changes.
The Trump administration's drug pricing blueprint was met with substantial skepticism when released this past May. The "massive" voluntary drug price cuts promised by President Donald Trump have failed to materialize, and many questions remain on how the White House will implement mooted reforms.
Yet, momentum behind the administration's efforts has perhaps been stronger than some initially anticipated — something HHS is eager to highlight in its new "100 Days of Action" report.
After Trump targeted Pfizer for its July price increases on several dozen drugs, the pharma giant and a dozen or so of its peers announced freezes or rollbacks of planned price hikes. Merck went even further, cutting the list price of its hepatitis C medicine by 60% and of several other small brands by 10%.
According to data cited by HHS, there have been 60% fewer branded drug price increases enacted between May 11 and Aug. 15 than during the same period last year. It's not clear, however, what's included in that comparison.
"Cutting list prices and rolling back proposed increases in particular are an unprecedented recognition of the fundamental changes going on in drug markets," wrote Dan Best, senior HHS advisor on drug pricing, in comments on the report.
Major caveats do apply, though. Most of the freezes announced only apply through the end of this year, and roll backs of planned increased could snap back next year. Merck's price cuts are on medicines that are relatively immaterial to its bottom line.
The administration's willingness to boast about such actions sets up a major litmus test come January, when the industry typically takes its first price increases of the new year.
On the policy side, HHS has signaled interest in overhauling the current system by which drugmakers trade rebates for formulary coverage. Such rebates, negotiated by pharmacy benefit managers, have become a target in the debate over who's most to blame for the sticker shock many patients now face in paying for prescription drugs.
A proposed regulation on modifying the legal exemption that permits rebates to sidestep anti-kickback rules is currently under review at the Office of Management and Budget, although no timeline for its release has been given.
Eliminating — or reducing the role of — rebates would be a major change impacting drugmakers and insurers as well as PBMs. But, as comments by executives at Pfizer, AbbVie and other pharmas make clear, change is increasingly seen as more likely than not.
"We continue to believe the rebate safe-harbor rule is likely to eliminate the safe harbor for percentage based rebates trued up after the fact in favor of fixed price discounts up front," wrote Cowen Washington Research Group analyst Rick Weissenstein in an Aug. 20 note.
In the 100 days report, HHS also indicated it's pushing for legislative changes as well, including on pharmacy gag clauses and on the Affordable Care Act cap on Medicaid inflation penalties. Action could also come on the Medicare Part D drug benefit, analysts predict.