President Donald Trump has repeatedly spoken about the efforts of his administration to reduce prescription drug prices, but those efforts may not be as effective as claimed.
“For the first time in half a century, we’ve reduced the price of prescription drugs,” Trump said Tuesday during his first reelection rally, suggesting he intends to make the claim a significant part of his campaign.
The Validity of the Claim
Americans pay the highest prices for prescription drugs in the world. In 2016, U.S. spending on prescription drugs totaled over $450 billion, a rate that’s two to six times higher than the world average.
While Trump has said in the past that one of his greatest priorities is to reduce the price of prescription drugs, his statement about drug prices at the rally is misleading, noted a PolitiFact article from May that fact-checked a similar claim.
While certain data shows list prices for some prescription drugs may have dipped in 2018, PolitiFact said the data does not include that some drug prices have increased or the specialty drugs that drive prices up.
“There is also no evidence to support the argument that Trump himself is responsible for changes in drug pricing,” PolitiFact wrote.
An Associated Press investigation from 2018 reported that during the first seven months of the year, there were 96 price hikes for every price cut. Though, AP wrote that “the number of increases slowed somewhat and were not quite as steep as in past years.”
During the first quarter of 2019, Rx Savings Solutions said the list prices increased for more than 3,000 drugs and decreased for 117 drugs.
A spokesperson for Rx Savings Solutions told The Globe Post in a Thursday email that no report was available for distribution about those numbers.
The Budget, the Blueprint, and Other Efforts
Demetrios Kouzoukas, principal deputy administrator at the Centers for Medicare and Medicaid Services, testified before the Senate’s Special Committee on Aging on Wednesday about increasing drug costs and efforts to address it.
Medicare is a program run by the federal government that provides health insurance to elderly Americans, while Medicaid is a similar program that provides similar service to low-income and disabled people.
In his submitted testimony, Kouzoukas said steps are being taken to “reduce prescription drug prices by unleashing innovation and empowering patients through increased transparency across the program.” He also said that Trump’s proposed 2020 budget “laid out a range of proposals for lowering drug prices.”
Kouzoukas pointed to a blueprint released in May 2018 titled “American Patients First Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs.” The plan lays out four key strategies to address the challenges of the U.S. drug market: improved competition, better negotiation, incentives for lower list prices, and lowering out-of-pocket costs.
The blueprint also identified the following as challenges in the U.S. drug market:
- High list prices for drugs
- Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools
- High and rising out-of-pocket costs for consumers
- Foreign governments free-riding off of American investment in innovation
Trump’s budget proposal includes changes in Food and Drug Administration operations that would increase access to generic drugs, which are cheaper than the brand-name options.
It also proposes putting a cap on Medicaid manufacturer drug rebates, creating an out-of-pocket spending cap for those enrolled in Medicare Part D and, for beneficiaries who receive the low-income subsidy, eliminating cost sharing for generics.
However, the Center on Budget and Policy Priorities notes that Trump also proposes to raise Part D premiums and charge more to some beneficiaries.
Another one of Trump’s proposals to lower drug prices is to target rebates – returns on amounts already paid for the drugs – which the Congressional Budget Office estimated would cost taxpayers $177 billion over a decade.
Prices and Frustrations Rise
As prescription drug prices increase, so does bipartisan frustration about it.
“Our drug pricing system is opaque and rife with misaligned incentives,” Republican Senator Susan Collins, chair of the Special Committee on Aging, said at the Wednesday hearing.
For a solution to be found, Collins said, “We need to work together.”
The Health Care Cost Institute found that people in the United States with Type 1 diabetes paid around twice the amount for their insulin in 2016 than they did in 2012, while nearly a quarter of all people who use prescription drugs say it is difficult to afford them, according to a Kaiser Family Foundation poll from February.
“These costs, to say the least, can be crushing,” said Democratic Senator Bob Casey, ranking member of the committee.
Collins called the price increases on insulin outrageous, noting that insulin has been around since 1921, and Democratic Senator Jeanne Shaheen, noted that the “the skyrocketing cost of insulin is a matter of life and death for diabetic patients of all ages.”
The ACA contention
During the hearing, Casey expressed worry over what he said was the Trump administration undermining the Affordable Care Act and Medicaid.
“How the hell can we get prescription drug prices down when we have the Affordable Care Act being attacked morning, noon and night, and the Medicaid program being the subject of what I would call decimation because of what the administration is doing?” Casey asked Kouzoukas.
Germany pays 35% less for prescription drugs than the US without sacrificing innovation or access.
America needs real reform to effectively bring down our sky-high drug prices right now. https://t.co/yv3t7HKDQ1
— Rep. Ro Khanna (@RepRoKhanna) June 21, 2019
Trump has repeatedly vowed to and made attempts to repeal and replace the ACA. His 2020 budget proposal includes reductions in Medicaid and Medicare. Trump has also proposed a bundle of Medicaid reforms, such as work requirements and giving states the ability to modify eligibility requirements.
Among the proposals omitted from Trump’s blueprint is a plan to allow cheaper prescription drugs to be imported from countries like Canada. While several pieces of legislation to that effect have been introduced in recent years, most recently by Bernie Sanders, none have passed, in part because of aggressive lobbying from the pharmaceutical industry.
Drug manufacturers spent $52 million on lobbying in the first quarter of 2019 and $169 million throughout 2018, according to The Center for Responsive Politics. That money appears to be having some real effects in preventing reforms aimed at lowering drug costs.
A Senate bill was introduced on May 9 that aims to prohibit drug product manufacturers’ anti-competitive behaviors in the patent system. Bloomberg Government reported that drug companies were worried about the federal government would be able to sue them to prevent them from using the patent system to limit competition.
After pharmaceutical lobbyists put pressure on the bill, Republican Senator John Cornyn, the bill sponsor, announced modifications to it that will “water down” its impact, according to Bloomberg Government.