Dive Brief:
- The Associated Press reports that GOP presidential frontrunner Donald Trump has endorsed direct price negotiations between Medicare and drugmakers.
- During a campaign event in the early primary state of New Hampshire on Monday, Trump told the 1,000-person crowd that such negotiations could "save $300 billion" on an annual basis, according to the AP.
- Trump went on to direct a very pointed finger at who he believes is responsible for blocking such a policy: the biopharma industry. "We don’t do it," he said, referring to the price negotiations. "Why? Because of the drug companies."
Dive Insight:
Politics breeds strange bedfellows. And bedfellows don't get much stranger than a contingent which includes Donald Trump, Hillary Clinton, Bernie Sanders, and Barack Obama.
The idea of promoting drug price negotiations in order to secure savings for Medicare, which covers more than 50 million American seniors overall and nearly 40 million through its Part D prescription drug program, has long been endorsed by Democratic politicians (albeit more vocally in recent years).
In 2015, President Obama released a $4 trillion budget proposal that, for the first time, included provisions that would give the HHS Secretary the authority to negotiate high-cost drug prices covered under Part D. Hillary Clinton and Bernie Sanders have both also announced their support for these pricing talks.
The biopharma industry has, unsurprisingly, been vehemently opposed to such proposals. Obama's budget contained "harmful proposals" that could "undermine seniors’ access to care in the successful Medicare Parts D and B programs," wrote the trade group PhRMA last year, warning that "the President’s proposals could jeopardize... access by driving up [Part D] premiums, reducing choice and restricting coverage."
Putting aside the politically infeasible task of passing such a reform through Congress, some also question current price negotiation proposals' ability to secure significant savings barring a strong government formulary mechanism akin to the ones used by groups such as NICE in the U.K. Without such leverage, it's difficult to see how Trump would achieve the $300 billion-per-year savings estimate that he cites.
In fact, the Congressional Budget Office estimates that extending Medicaid-style rebates to Part D beneficiaries with low incomes could save $116 billion over 10 years - a relatively paltry sum considering the titanic costs of the Medicare program.
On the other hand, if Trump meant that he does actually want to pursue a more aggressive formulary system like some in Europe, it would likely raise the specter of care-rationing and incite political backlash, including from many of his fellow Republicans.
Still, Trump, whose surprising success so far in the 2016 presidential election cycle has been attributed by some to his ability to feel out a populist pulse, may simply be playing the idea as good politics. The biopharma industry has already been under the gun (from Democrats and the GOP alike) during the campaign, and polling has shown that the general public is generally unpersuaded by the sector's arguments that drug price controls would stifle innovation.