What to expect from Trump's Friday drug pricing speech
After weeks of delays, President Donald Trump is expected to lay out his administration's latest plank of proposals aimed at lowering the cost of drugs on Friday, the White House confirmed to BioPharma Dive.
Trump, who famously said drug companies are "getting away with murder" and pledged to reduce the price of prescription drugs at his State of the Union address in January, has so far done little to change the way drugs are priced and paid for in the U.S.
But a trail of recent announcements made by his chief deputies at the U.S. Department of Health and Human Services, including Food and Drug Administration Commissioner Scott Gottlieb, have some in the industry prepared for the President to lay the foundation for real changes to the system.
In a speech Wednesday to the American Hospital Association, for example, HHS Secretary Alex Azar said Trump would focus on high list prices set by drugmakers, a lack of negotiating tools to combat higher prices for government programs, out-of-pocket costs for consumers and purported "free-riding" by other countries on U.S. R&D.
The HHS is expected to seek ideas on how to lower drug prices and reduce out-of-pocket costs through an official request for information. A notice on HHS's strategy to do so is currently under review by the Office of Management and Budget.
Still, skeptics abound; some experts are warning the speech is unlikely to break new ground.
Cowen analysts Eric Assaraf and Rick Weissenstein are among those. In a recent research note, the analysts noted that despite Azar's comments, "we do not see it that way and continue to believe the announcement will do little to reduce drug spending."
The PBM puzzle
While the speech might yet turn out a dud, the recent comments from administrators suggest certain topics are likely to be on the agenda. One such issue is the continued scrutiny of the role pharmacy benefit managers (PBMs) play in impacting out-of-pocket costs. Last year, CMS asked for comment on potentially changing how drugmaker rebates are passed onto consumers when they purchase Medicare Part D drugs. Gottlieb has also been particularly critical of the middlemen, suggesting in multiple public comments that they've outlasted their usefulness.
Ropes & Gray health care partner Tom Bulleit believes this will lead to Trump announcing the government is planning to move forward with a requirement that PBMs pass on a percentage of Part D rebates at the point-of-sale.
"What I anticipate him saying with respect to possibilities, is that he will pick up on this idea of requiring Part D plans to require PBMs to pass through some portion of rebates to consumers, which can be done administratively, Congress doesn't have to get involved on that," Bulleit said in an interview.
But the President may go even further to upend the role PBMs play in the healthcare system.
Last Thursday, Gottlieb told the Food and Drug Law Institute (FDLI) Annual Conference that the federal government may reexamine the current safe harbor for drug rebates under the anti-kickback statute.
"Such a step could help restore some semblance of reality to the relationship between list and negotiated prices, and thereby boost affordability and competition," Gottlieb said.
But the idea has confounded some experts. Weissenstein notes the anti-kickback statute currently has an exemption for discounts, but "rebates" specifically are only spelled out as an accepted discount in a 1991 regulation.
"Because it is not specifically written into law, the Trump Administration would be able to eliminate the safe harbor for rebates without Congressional action," Weissenstein wrote. "The anti-kickback rules only apply to federal programs and do not apply to the private market."
But Bulleit says that many PBM agreements incorporate Part D language, which "certainly provides some degree of comfort that such payments aren't illegal — if Part D recognizes them as appropriate, how can they be kickbacks?" he asked.
"I think I agree that administrative action — such as [Office of Inspector General] guidance in the form of a Special Advisory Bulletin or something like that, would really shake things up, but it would be a fundamental change that I suspect both pharma and the PBMs likely would be prepared to challenge on [Administrative Procedure Act] grounds and possibly on substantive [anti-kickback statute] grounds," Bulleit said.
Bulleit also raised concerns the administration has been "talking out of both sides of their mouth" when it comes to PBMs.
"On the one hand, they say that we like PBMs because under Part D they get to negotiate prices and rebates, and under Part B the government can't do that. But on the other hand, the PBMs are the bad guys because they are propping up their own profit margins instead of passing through these rebates," Bulleit said.
Another likely topic to be touched on is the FDA's efforts to impact pricing by encouraging generic drug competition. At the FDLI conference, Gottlieb noted that last year the agency approved a record number of generic drugs, topping 1,000 approvals. Under his leadership, the FDA has prioritized the review of generics with little competition.
Gottlieb has also put brand manufacturers on notice that gaming of the system to prevent generic entry will not be tolerated, calling attention to practices such as abusing risk evaluation and mitigation strategy (REMS) programs, abuse of the 180-day exclusivity system clock and improper pay-for-delay arrangements aimed at protecting drug firms from legitimate patent challenges.
"We're going to be unveiling some new guidance in the next few weeks as part of the President's plan, which addresses some aspects of these loopholes that companies exploit when it comes to REMS," Gottlieb said. "And when firms play these games, it's not just competition that suffers. It's the entire public that suffers including your clients."
In addition, the FDA is preparing a Biosimilars Action Plan, which the agency plans to launch in a few weeks.
Trump may also touch on another PhRMA-friendly idea: increasing oversight of the 340B program. His proposed budget targeted 340B hospitals, suggesting those that don't conduct enough charity care should face reduced payments. The budget also pushed for a transparency requirement that hospitals be required to disclose how they use the savings from the 340B program.
The president could also speak on ongoing efforts by the administration to expand access to association health plans and short-term limited duration insurance as lower cost alternatives to Affordable Care Act compliant plans.
Major payer lobbies including America's Health Insurance Plans and the Alliance of Community Health Plans recently slammed short-term plans as an idea that would undermine consumer protections, raise premiums in the individual market and jeopardize market stability. But the Spring 2018 Unified Agenda, released Wednesday, indicates the administration intends to finalize the proposed rule in June.
Expect to hear more on the Right to Try, too. During his State of the Union, Trump pushed for passage of the legislation, which aims to provide access to experimental, unproven treatments to treat life-threatening illnesses when patients have run out of options.
The legislation ultimately passed the House of Representatives after initially failing to garner the votes to pass in March. But the Senate and House versions currently differ and there has been no sign that either chamber will take up the other's legislation.
- Healthcare Dive State of the Union: 4 things Trump said on healthcare
- Healthcare Dive Pharma, payers clash over CMS Part D drug rebate plan
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