Inside Trump’s plan to lower drug prices

In his recent State of the Union address, President Donald Trump promised to continue lowering drug prices and fund research for HIV/AIDS and childhood cancer. Here are the ways experts say he will implement those pledges.

Citing the disparity between what Americans and those in other countries pay for the same drugs, Trump said he wants Congress to pass legislations that “finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients”.

Trump wants to create an international price index that benchmarks US drug prices against 16 other developed nations. “Drug prices in these countries are generally lower than they are in the US, so it is likely that prices would fall,” Jason Shafrin, senior director of policy and economics at Precision Health Economics, told FormularyWatch.

Related: The impact of high drug prices on hospitals

Trump also released a proposed rule that would outlaw rebates from pharmaceutical companies to pharmacy benefit managers (PBMs) in Medicare Part D and in Medicaid managed care organizations. “Although rebates may appear to lower net prices, pharmaceutical firms typically respond by increasing list prices so that after rebates, their revenue remains constant. In fact, pharmaceutical firms may be incentivized to raise prices in order to permit PBMs to increase rebates and thus negotiate favorable formulary placement,” Shafrin said.

Overall, eliminating the rebates is likely to lead to lower drug list prices, Shafrin said.

In his State of the Union address, Trump also said that patients with pre-existing conditions should have health insurance coverage. However, Shafrin said that it is not clear how he will obtain that goal. “Under the ACA, health insurers were barred from adjusting premiums based on pre-existing conditions.  In fact, last year Trump supported replacing the ACA with the American Health Care Act, which would have allowed insurers to charge higher premiums to individuals with pre-existing conditions,” Shafrin said.

Related: Pharma makers to hike drug prices in 2019

Trump has not provided many details on how exactly he will help to provide high-quality healthcare coverage for patients with pre-existing conditions, Shafrin added.

Trump also promised to fund research to treat HIV/AIDS and childhood cancer. He plans to target interventions-particularly pre-exposure prophylaxis (PreP) treatments such as Truvada-to prevent the spread of HIV/AIDS. 

“President Trump aims to target the interventions in high-risk large metro areas and high-risk southern states,” Shafrin said.

To fight childhood cancer, Trump is planning to ask for $500 million in funding over 10 years. “This amount, however, is fairly modest and is unlikely to move the needle on cancer research,” Shafrin said.

Research has found that relative to the economic burden of disease, funding schizophrenia, bipolar disorder and major depressive disorder were all less than $4 per $1000 of economic burden, whereas funding for cancer, lung disease, and diabetes were $75, $9 and $8 respectively, according to Precision. Funding initiatives to fight HIV is important, but funding initiatives to address mental health may be under-appreciated,” the organization said in a statement.

Read more: New bills aim to lower drug prices