The Trump administration is threatening drug manufacturers with enhanced regulations as part of an aggressive behind-the-scenes campaign to win lower prices for prescription treatments, according to people familiar with the talks.
The effort follows President Trump’s proclamation last month that drug companies were preparing to announce “massive” cuts on the price of prescription treatments. The sources say no plans were in the works prior to that statement, and now federal officials are scrambling to make Trump’s statement a reality.
The Department of Health and Human Services has held a slew of meetings with more than a dozen pharmaceutical companies over the past few weeks, and agency representatives have told manufacturers they must reduce the price of prescription treatments, or the agency will move forward on more stringent regulations than those suggested so far.
The agency threatened to launch a sweeping initiative that could, among other things, impact federal reimbursement for some of the industry’s more innovative and lucrative treatments. Health and Human Services has also pressured companies to ignore longstanding policies and procedures that could prevent the drugmakers from independently announcing price cuts, the people told the Washington Examiner. The discussions have yet to result in any public announcement on reduced drug prices.
A department spokeswoman said personnel are working with pharmaceutical companies, pharmacy benefit managers, insurers, and others to “respond to President Trump’s call to action and help patients pay less for their prescription drugs.” The spokeswoman didn’t respond to questions on whether the agency threatened retaliation if the companies didn’t cut prices.
The escalating tensions underscore the difficulty the administration faces in translating Trump’s vague and sometimes contradictory drug-pricing framework into actual results. Health and Human Services Secretary Alex Azar previously said it could take several months for the public to see any results from the effort.
In conversations with the agency, companies stressed that contracts with partners are already set and adjusting prices on drugs now would require an overhaul of those agreements, sources say. Azar, a former drug company executive, blamed pharmacy benefit managers that operate as middlemen between insurers and manufacturers for the difficulty lowering prices.
“We have had many major drug companies with major products who want to make substantial and material price decreases,” he told the Senate Finance Committee on Tuesday. “The pharmacy benefit managers and the wholesalers are all dependent on getting a percent of list price.”
Azar encouraged senators to reach out to the benefit managers and inquire “whether they have received suggestions for lower list prices and what their reaction has been.”
The agency appears to be taking steps to quickly approve any industry plan should drugmakers try to act independently of benefit managers. The Office of Inspector General has traditionally overseen the process to review so-called “safe harbor” requests for companies looking to try new pricing schemes without fear of violating federal law.
Sources say that power has now been consolidated within Azar’s office, a dramatic departure from prior administrations.
A spokeswoman for the inspector general said the office’s authorities have not changed. A Health and Human Services spokeswoman, meanwhile, said the “authority to issue safe harbors was vested in the Secretary after consultation with the Attorney General.”
