Trump drug pricing setbacks put pressure on Congress

President Trump’s drug pricing agenda is on thin ice following two major setbacks this week, putting increased pressure on Congress to deliver bipartisan legislation.

The White House on Thursday killed a sweeping proposal that would have eliminated the secretive discounts between drug companies and pharmacy middlemen.

“Based on careful analysis and thorough consideration, the President has decided to withdraw the rebate rule,” White House spokesman Judd Deere said in a statement.

{mosads}The remarks came just days after a federal judge blocked a rule that would have forced drug companies to disclose prices in television ads. The administration said it is discussing next steps with the Justice Department.

Trump has made lowering drug prices a top priority of his presidency, and the collapse of two high-profile policies to that effect in less than a week leaves him with few accomplishments to point to on that front heading into 2020.

“Both politically and in terms of optics, they are undoubtedly going to feel the need to get something over the line,” said an industry source.

On top of that, this week’s developments follow a decision by administration officials in May to walk back a plan that would have allowed insurers to exclude certain drugs from coverage if prices rise faster than inflation.

Meanwhile, drug prices continue to rise, adding to health care costs for patients.

More than 3,400 drugs increased in price by an average of 10.5 percent during the first six months of 2019, or five times the rate of inflation, according to a recent study by Rx Savings Solutions.

{mossecondads}The rebate plan was a centerpiece of the Trump administration’s 2018 drug pricing blueprint, and had been touted by Health and Human Services (HHS) Secretary Alex Azar as one of the best ways to bring costs down.

According to HHS, the proposal would have lowered prescription drug prices and out-of-pocket costs by encouraging manufacturers to pass discounts directly on to patients at the point of sale.

When the policy was first proposed in January, Azar said the rebate rule had “the potential to be the most significant change in how Americans’ drugs are priced at the pharmacy counter, ever.”

The drug industry lobbied heavily in favor of the plan, but the administration pulled back after facing fierce opposition from AARP, the health insurance industry and pharmacy benefit managers. 

Another obstacle came from within the White House, where actuaries projected that the rule would have raised Medicare premiums for senior citizens, and would have increased the amount of money Medicare pays for prescription drugs. Implementation would have cost the government nearly $180 billion.

“The president is deeply committed to protecting America’s seniors,” Azar told reporters during a briefing Thursday.

“We’re not going to take any action that could run the risk of seniors’ premiums going up,” he added. “That’s it. It really is that simple of an issue, and the president made that call, and I totally support him on that.”

Spiking the rebate rule is a significant blow not only to the administration but also to Azar, who has spent months working on the plan. He often touted it on cable news and in speeches to interest groups. 

The rule’s demise also comes amid reported tension between Azar and White House Domestic Policy Council Director Joe Grogan, who was reportedly among Trump’s advisers pushing for the president to revoke the rule while Azar was advocating for it.

Senators on Thursday acknowledged that there is now more pressure on them to come up with legislation.

“The withdrawal puts even more pressure on Congress to step up to the plate. It’s time for Congress to legislate and deliver on our promise to lower health care costs for Americans,” said Senate Finance Committee Chairman Chuck Grassley (R-Iowa).

Grassley has been in negotiations on legislation to lower drug prices for months with Sen. Ron Wyden (Ore.), the panel’s top Democrat, and the pair say they are close to a deal.

“It’s going to have to be Congress. What is inescapable, is that that decision drives home how important it is for Congress to step up and deal with these skyrocketing prices,” Wyden told reporters Thursday.

The public retraction of the rule also makes it harder for the White House to make a splash on drug pricing. Azar said he is working with the president on other ideas, and Trump has hinted at “big moments” to come on drug pricing over the next week. 

“We have many administrative actions that we have done and that are still either proposed, or in the works, and you don’t even know about,” Azar said.

Lobbyists said they expect the administration to soon issue a plan to tie some Medicare drug prices to lower prices in other countries.

That plan is facing intense opposition from the drug industry as well as some conservative lawmakers, including Grassley, but that might not matter to a president needing a win.

One industry lobbyist said Trump is more concerned about negative headlines than about appealing to GOP lawmakers and outside groups.

“There’s going to be pressure to quickly change the narrative,” the lobbyist said. “I don’t think conservative opposition matters. It seems Trump has made up his mind. Whether or not it adheres to the principles of third-party interest groups is not what matters to him.”

Trump has also embraced the idea of importing cheaper drugs from other countries. The idea is a long shot, and is vehemently opposed by the pharmaceutical lobby. But it has broad public support, and Azar said they are working on a plan.

“The president and I are committed to importation and making that work, and we’re working on that now,” Azar said.

Tags AARP Alex Azar Chuck Grassley Donald Trump Drug prices health costs HHS pharmaceuticals Ron Wyden
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