Trump might actually lower drug prices for people with Medicare

Trump is essentially fast-tracking an executive order he issued in September calling for international reference pricing–pricing drugs at a similar level to peer nations–for some drugs available to people with Medicare. His administration is likely planning to issue an “interim final rule,” which sounds like an oxymoron. But, it would skip the interim rule-making phase and go directly to a final rule.

Many experts believe that pharmaceutical companies will bring lawsuits to stop the rule from taking effect. If they rely on the Republican argument that the administration is trying to impose price controls on a free market, it would be laughable. But, given how many jurors are sympathetic to industry, it would be no surprise if the drug companies win.

To be clear, the prices that would take effect under this rule are no different from the prices Americans pay if they import drugs from abroad. Right now, the government does not allow people to import drugs from abroad, even for personal use, but millions of people do anyway because they are so much cheaper. There is absolutely no reason that we should be paying twice as much as people in peer nations for our drugs.

What’s most interesting is that President Trump’s plan is in line with the Democrats’ House bill, HR3, which would also regulate drug prices for people with Medicare based on the price of drugs in other wealthy countries. However, HR3 extends these Medicare prices to private health insurers, and Trump’s executive order does not. However, HR3 only covers 350 drugs over ten years.

President Trump has another rule that may go into effect that could help lower drug prices. It would end the rebates that go to pharmacy benefit managers (PBMs), which simply inflate the cost of drugs. However, if these rebates ended, there is nothing to stop the drug companies from pocketing the rebate money they would have paid the PBMs and raising the price of their drugs further. Not surprisingly, pharmaceutical companies like this policy.

Curiously, there is a whacky argument put forward by the PBM industry that eliminating rebates would raise the cost of drug insurance premiums in the Medicare Part D prescription drug benefit. We are living in an Orwellian world. The PBM trade association needs to justify its existence.

Here’s more from Just Care:

• What would a President Biden do about drug prices?
• More than one in three older adults could be taking inappropriate drugs
• States charge 26 drugmakers with illegally driving up the price of generic drugs
• With drug prices soaring, millions buy drugs abroad
• Insurers drive up costs for people with diabetes