Prescription drug spending in the United States is the highest in the industrialized world, jumping 8.5 percent between 2014 and 2015 to a whopping $309.5 billion. A Kaiser Family Foundation report found that 77 percent of Americans – regardless of political affiliation – believe access to affordable medication for chronic conditions is a top priority for the president and Congress. The same Kaiser study found that 63 percent of respondents are looking to the government specifically to lower the cost of prescription drugs. According to a Harris public opinion poll, 75 percent of people favor price controls on makers of pharmaceuticals and medical devices.
During the 2016 election, presidential candidates recognized public pressure for new policies regarding drug pricing. Both parties are calling for Medicare to be able to negotiate pricing directly with pharmaceutical companies. There’s also a push for faster approval of generic drugs and greater transparency on prescription drug costs, and allowing the importation of drugs from other countries that can provide the same prescriptions at a lower price than the U.S.
Trump’s health care reform plan closely follows Republican viewpoints, but he won’t be able to do anything about the rising cost of prescription drugs if proposals don’t address the forces behind these price increases. That means addressing the high cost of specialty drugs, which are driving pharmaceutical costs and outpacing the U.S. Food and Drug Administration (FDA) processes. Specialty drug approvals now exceed standard drug approvals, delaying the availability of drugs like those used to treat cancer and hepatitis C. In 2014, specialty drugs accounted for over half of FDA approvals, and patent-exclusivity rules negatively impacted price competition for biological drugs. Getting around the partisan divide on these issues continues to prove challenging.
When Medicare added its prescription drug benefit in 2006, it also increased overall spending on prescription drugs. Costs increased from 2 percent of $193 billion to 29 percent of $298 billion. Specialty drugs cost substantially more than their regular counterparts. Nearly 25 percent of those taking specialty medications have a hard time affording them.
President-elect Trump is in favor of keeping Medicare Part D prescription drug coverage, but he also wants to make significant changes to the Medicare and Medicaid programs. One major change is funding state-run Medicaid programs through block grants that cap federal contributions rather than the current open-ended amount based on enrollees and their needs.
He would like to give individual states the opportunity to form their own policies on prescription drug prices using their regulatory authority to require drug manufacturers to disclose their pricing methods. States could then establish their own maximum reimbursement amounts for certain drugs to make sure pricing reflects current wholesale costs and availability.
Trump has also mentioned giving Medicare the legal authority to negotiate prescription drug prices, but that idea is currently not mentioned in his health care plan. Republican congressional leaders feel efforts to improve the pace of the Food and Drug Administration approvals for new drugs and devices, and encouraging price transparency and competition, are better ways to reduce costs. Having Medicare negotiate pricing does not seem achievable in the current Congress.
Medicare beneficiaries represent a big share of the market for medications, but aside from these program recipients, the role of intermediaries like insurance companies and pharmacy benefit managers in the health care industry makes it hard for all doctors and patients to know the true price of medicine. Trump’s campaign website says consumers should have access to “imported, safe and dependable drugs from overseas,” which allows for more options through competition while promoting price transparency. Removing barriers to purchasing drugs from other countries, like Canada, can help lower pricing on equally effective generic medications as well.
Trump doesn’t go into many specifics when it comes to pharmaceutical costs for research and development except to say that since he is not relying on the funds or influence of special interests groups, he will have more leverage to lower overall costs.
The U.S. is currently at the height of an opioid abuse epidemic that is killing more people annually than car accidents or gun violence. These drugs include heroin and fentanyl. Once addicted to prescription pain medications, people look for less expensive alternatives, such as illegal heroin. Trump has touched on the need for funding for the treatment of heroin and opioid addiction. His solution, though, is largely focused on building a wall at the U.S.-Mexico border to prevent access to illegal drugs in the first place.
President-elect Trump seems to understand the average American’s plight with regard to prescription drugs and associated costs. Time will tell if he can convince Congress to make much needed changes to the Medicare program and the drug industry.