President Trump’s budget request contains several proposals to lower drug prices, but experts say they won't help much since they aren’t targeting the priciest, brand-name products.
The budget proposal includes several measures such as an experiment to give state Medicaid programs more power to negotiate for lower drug prices and another proposal to boost generic drug competition. However, none of the proposals released Monday directly address the problem of expensive, specialty drugs, experts say.
“They do not seem to be able to save significant amounts of money,” said W. Gerard Anderson, professor at Johns Hopkins Bloomberg School of Public Health. “They are tinkering around the edges on the drug issue, but they are not doing what President Trump promised, which was to really negotiate drug prices.”
A major problem for patients is the stratospheric price of brand-name, specialty drugs that treat diseases such as cancer. An example is the hepatitis C cure Harvoni, which costs more than $80,000 for a 30-day supply.
Anderson said the budget proposal could have given Medicare the power to negotiate for lower drug prices. It also does not include a call to allow Americans to buy cheaper drugs from Canada.
Both ideas have been proposed by Democrats but have gone nowhere in the Republican-controlled Congress.
Trump’s budget, which presents a wish list of spending and policy priorities to Congress, highlights key changes to how Medicare and Medicaid pay for drugs.
It calls for an experiment in which up to five states can determine their own drug formularies, which are lists of preferred drugs that the state’s Medicaid program covers. A drug is usually listed on a formulary if it provides the best value.
The experiment would include an appeals process to “protect beneficiary access to non-covered drugs based on medical need,” the budget proposal said. The experiment also would let states negotiate drug prices directly with manufacturers.
It also aims to make changes to Medicare Part D, the entitlement program’s prescription drug plan. Changes include capping out-of-pocket spending on annual drug expenses and allowing “additional flexibilities in formulary management,” without going into further detail.
The proposal also wants to modify Medicare Part B, which covers doctor- and hospital-administered drugs, to discourage manufacturers from “increasing prices faster than inflation.”
Another proposal includes giving the Food and Drug Administration more authority to block a generic drug company if it is preventing competition for a generic product from other manufacturers. The first generic of a brand-name product gets 180 days of exclusivity, but some manufacturers can block competitors from entering the market after the exclusivity period expires.
Anderson said the proposals are helpful but do not go far enough. For one thing, insurers offering Medicare Part D plans already negotiate and establish formularies.
While insurers have the power to negotiate for lower prices, Medicare itself does not.
“This is already occurring and so they are not really changing the system in a fundamental way to get substantially lower prices,” Anderson said.
Other experts weren’t impressed, either.
"The White House doesn't want to take on the drug industry," Geoffrey Joyce, a pharmaceutical economist at the University of Southern California, told the Los Angeles Times. "They just want to be able to say that they're doing something."
Another analysis pointed to the low return in savings. The Office of Management and Budget projects the proposals would save the government $5.7 billion over the next decade.
“To put this into context, that is less than 0.5 percent of what Medicare alone is projected to spend on prescription drugs over a decade [2016 to 2025],” according to an analysis from Jeanne Lambrew, senior fellow at the left-leaning think tank the Century Foundation. Lambrew is a veteran of the Obama administration.