President Donald Trump took to the Rose Garden Friday, unveiling the "American Patients First" blueprint that senior administration officials touted as "the most comprehensive plan to tackle prescription drug affordability."
Despite the rhetoric, Wall Street analysts, lobbyists and academics say the plan, which heavily targets the role pharmacy benefit managers play in the healthcare system, will do little to put downward pressure on healthcare spending.
Drugmaker stocks jumped immediately following the President's speech.
"There are no major surprises, it spares the pharmaceutical industry of the reform that they most vehemently oppose," a pharmaceutical lobbyist told BioPharma Dive in an interview following the Trump speech.
"Real reforms that advocates say will move the needle, none of them are included. There's a lot of tinkering around the edges," the lobbyist said. "By and large, the amount of money that this health system, that government and private payers are going to be spending on prescription drugs is probably not going to change significantly."
The blueprint, which echoes many of the ideas first put forward in Trump's FY 2019 proposed budget and the White House Council of Economic Advisers drug pricing report, focuses on four areas: lowering high list prices set by manufacturers; equipping government and private payers with new tools to negotiate prices; lowering out-of-pocket costs for consumers and taking steps to stop other countries from "freeloading" off of American innovation.
Notably, however, the blueprint only states that "HHS may" take many of proposed actions in response to Trump's call to lower drug prices.
Pricing in drug ads?
Since Trump took office, most of the action on drug pricing has come from the Food and Drug Administration, which has gone about as far as it legally can on the issue by pushing for greater competition in drug markets.
The blueprint echoes some of those initiatives and says curbing abuse of FDA's Risk Evaluation and Mitigation Strategy (REMS) programs will be a priority to help generic drugs come to market faster. It also seeks to promote uptake of biosimilars.
"We are getting tough on drugmakers that exploit our patent laws to choke out competition. Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies," Trump said.
The generic drug lobby immediately praised Trump's speech.
"President Trump's embrace of generic and biosimilar competition as a key to lowering brand-name drug prices is an important step forward for patients coping with skyrocketing health care costs," Association for Accessible Medicines CEO Chip Davis said in a statement.
Perhaps the only notable deviation from ideas already hinted at in prior speeches by officials was a call for the FDA to evaluate whether direct-to-consumer drug advertising should include list prices.
"Think about all the time everybody spends watching drug company ads, and how much information companies are required to put in them. If we want to have a real market for drugs, why not have them disclose their prices in the ads, too?" said Department of Health and Human Services Secretary Alex Azar, who spoke at the Rose Garden after Trump. "We're immediately going to look into having the FDA require this."
Medicare Part D changes
Proposed Part D reforms would allow greater benefit design flexibility; provide free generic drugs to low-income seniors; require such plans to pass on a minimum percentage of drug rebates with patients; disincentivize plans to accelerate beneficiaries into catastrophic coverage through branded drugs by establishing a new out-of-pocket maximum.
Requiring Part D plans to pass on rebates to consumers is one idea PBMs have rallied against. But the President's blueprint hinted at further action the government could take, mentioning reexamination of how drug rebates are currently treated under safe harbor laws as a future "opportunity."
Yet investors in PBMs didn't appear to take that threat all that seriously. Shares in Express Scripts, one of the largest PBMs, traded up Friday afternoon, as did shares in UnitedHealth Group, which owns Optum.
"Getting rid of rebates and other price concessions would leave patients and payers, including Medicaid and Medicare, at the mercy of drug manufacturer pricing strategies," said the Pharmaceutical Care Management Association, a lobby for PBMs, in a statement following Trump's speech. "Simply put, the easiest way to lower costs would be for drug companies to lower their prices."
CVS, which runs a large PBM, said policies that lowered drug prices would be aligned with its business model and are unlikely to have a negative impact on profitability.
The blueprint also proposes changing Part D plan formulary standards to require a minimum of one drug per category or class instead of two.
PhRMA immediately cautioned that any changes to the system could potentially limit access to new drugs. “The proposed changes to Medicare Part D could undermine the existing structure of the program that has successfully held down costs and provided seniors with access to comprehensive prescription drug coverage," the drug lobby said in a statement.
The plan also will target Medicare Part B by limiting price increases that exceed the inflation rate within the program and restricting incentives for providers to prescribe high-cost drugs. Specifically, the blueprint calls for HHS to leverage the Competitive Acquisition Program for Part B.
Some more substantive changes are contemplated by the blueprint, although the document didn't lay out any concrete steps for how to achieve them.
One question raised by the plan, for instance, asks whether PBMs should have a fiduciary duty to act solely in the interest of whoever they are managing benefits for, soliciting input on how this might impact PBMs' ability to negotiate drug prices.
"Depending on how that is done, it could have a substantial effect," Allan Coukell, a drug pricing expert at Pew Charitable Trusts, told BioPharma Dive in an interview.
Democrats and advocacy groups blast plan
One big idea not included in the blueprint is a call for the federal government to have Medicare negotiate drug prices. "We're not calling for Medicare negotiation in the way that Democrats have called for," one of the senior officials told reporters Thursday night.
Democrats blasted the speech, saying that Trump is turning his back on his campaign promise to stop the pharmaceutical industry from "getting away with murder."
"The President spent last year pressing Congress to pass a massive tax cut — which gives away billions of dollars to drug companies and their executives who are already rich — but this year the President is apparently abandoning his campaign promise to authorize Medicare to negotiate directly with drug companies to lower prices," House Committee on Oversight and Government Reform Ranking Member Elijah Cummings said in a statement Friday.
The pharmaceutical industry has spent heavily this year on lobbying the federal government, perhaps with Trump's twice-delayed drug pricing plan in mind. According to a database maintained by the Center for Responsive Politics, spending by industry on lobbying this year totaled $84.8 million through April 24.