The Trump administration has made it a priority to rein in drug prices, with the president calling it part of the “agenda of the American people” during his 2019 State of the Union address on Tuesday night.
While health care was not the main focus of Trump’s address, he did lay out several goals, including lowering prescription drug prices and improving transparency. Here are five takeaways from the speech.
1. The president called for bipartisan action on drug prices
Lowering drug prices is a priority of the current administration. With 1 in 4 Americans skipping filling a prescription in the past year because of cost, this is an issue with support from both sides of the aisle.
Bipartisan legislation that has garnered broad support in recent months includes the CREATES Act and the Preserve Access to Affordable Generics Act (pay-for-delay), both of which would increase competition by allowing generic and biosimilar drugs to enter the market. There have also been recent hearings in both the Senate and House calling attention to prescription drug prices.
2. Despite claims of drug prices declining in 2018, drug spending has continued to increase
Trump’s statement about drug prices experiencing the single largest decline in 46 years because of his administration’s efforts is not as straightforward as it sounds.
Drug spending continues to increase year over year, and high drug prices continue to create affordability challenges for American families. Between 2012 and 2016, there was a reported 110% increase in the list price of brand prescription drugs. Much of this growth is driven by an increasing shift toward specialty drugs, which tend to be high cost and are expected to comprise nearly half of industry revenues by 2022.
Fact checkers were quick to point out that Trump was likely not referring to actual list prices. Instead, he was alluding to information from the consumer price index for drugs, which did show a decline, or to the recently-released data on inflation-adjusted trends, which included generic drug prices, according to POLITICO’s Sarah Owermohle.
Trump also stressed the discrepancy between what people in the U.S pay for drugs and what patients in other countries pay for the exact same drug. (Some drug prices in the U.S. are double that of 19 advanced industrialized nations.)
“It is unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place. This is wrong, unfair, and together we can stop it.”
Late last year, the Trump administration introduced a proposal that would reduce the price of certain high-cost drugs administered under Medicare based on what other advanced industrialized countries pay for those same drugs.
3. Increased transparency is a focus of the administration
The Trump administration has vowed to bring transparency to prescription drug markets.
His proposal to require pharmaceutical companies to list prices in TV ads, for example, is one of a few proposed regulations that could have a profound impact on the way consumers think about prescription drugs.
In his speech, Trump called for greater transparency in health care costs. And while the prescription drug market was highlighted, hospital and physician prices weren’t left out of the debate, and for good reason.
“We should require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs down.”
The fact is that increased consolidation among providers over the past few decades has driven up commercial sector prices, and charges and fees often appear inflated. Eighteen percent of hospital admissions include at least one claim from an out-of-network provider, sticking families with surprise bills they can’t afford.
4. There was zero mention of the administration’s recent drug rebate rule
In a surprising move, Trump was cautious not to tout his new proposed rule banning the rebates manufacturers give to pharmacy benefit managers (PBMs), the middlemen in the drug delivery system.
The long-awaited rule proposes the elimination of the controversial rebates drug makers pay to PBMs. Instead, it would reinforce the legal pathway for those discounts to be given directly to consumers at the point of sale.
Reactions to the proposal have been mixed — some say it will be ineffective as a standalone solution. Others, including drug makers, have praised the proposal, arguing it would help align incentives and avoid PBMs favoring drugs with high list prices.
5. His call on Congress to pass legislation lacked specifics
Trump urged Congress to pass legislation intended to lower drug prices, but not much was said beyond that.
“I am asking the Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients,” Trump said.
While health care was an important theme Tuesday night, his call to pass legislation wasn’t as strong as many industry analysts probably would have liked to see.