President Trump on Thursday targeted “global freeloading” by Europe, Japan and other developed nations that enjoy low prices on prescription drugs while American consumers pay more.
He proposed a test program that will monitor what consumers in other countries pay for drugs, then tie the price the U.S. government is willing to pay under Medicare to those international rates.
It should save the government $17 billion over five years, the administration said, and seniors should see lower costs at the pharmacy counter under the plan, because their out-of-pocket costs are pegged to the overall price.
“This is a revolutionary change. Nobody’s had the courage to do it or they just didn’t want to do it. And this is a change for the people. This is not a change for industry or for companies,” Mr. Trump he said in a speech at the Health and Human Services Department.
The payment model will be phased in beginning in late 2019 or 2020, affect half of the country and eventually tether most drugs under Medicare Part B to an “international pricing index.”
Mr. Trump rolled out the plan with less than two weeks to go before the mid-term elections.
Republicans candidates have been hammered over their approach to Obamacare insurance markets and protections for sicker Americans, so the speech offered a brighter message to voters. Voters frequently cite high drug costs as one of their leading concerns.
Democrats, though, called the move a distraction.
“It’s hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election when they have repeatedly advocated for and implemented policies that strip away protections for people with pre-existing conditions and lead to increased health care costs for millions of Americans,” Senate Minority Leader Charles E. Schumer said.
It’s the latest step Mr. Trump has taken to try and rein in costs. Earlier this month, the administration said it will force drug companies to display list prices for prescription drugs in TV ads.
The moves are unnerving the drug industry, which isn’t used to checks on how it prices and markets drugs.
Health and Human Services Secretary Alex Azar said the government has given pharmaceutical companies a chance to suggest their own solutions.
“None have come forward,” Mr. Azar said.
American policymakers have long complained that pharmaceutical companies count on the U.S. market to pay a huge share of their costs for research and development of blockbuster drugs.
HHS compared prices for 27 drugs in Medicare Part B to what 16 other developed nations pay. It turns out the U.S. is paying the highest price for 19 of the drugs, and it paid less than the international average for only one of them.
Mr. Trump said common treatments for eye problems and bone disease would be billions of dollars cheaper if they were priced fairly in the U.S.
“Same company, same box, same pill — made in the exact same location, and you would go to some countries and it would be 20 percent of the cost of what we pay,” Mr. Trump said.
Administration officials said they will use the regulatory process to get input on which areas of the country should be covered by the demonstration project.
Heading off complaints that only Trump country would be selected, Mr. Azar said politics would have nothing to do with the design of the model. If the experiment is successful, Congress and the administration would look at extending it nationwide.
Mr. Azar said he isn’t worried that congressional Republicans will balk at a plan that amounts to price setting, saying the government already pays a fixed cost and surcharge to doctors under Medicare Part B, which unlike other parts of the program doesn’t allow price negotiations.
“We’re handed a bill and we write a check, that’s it,” Mr. Azar said. “That is not tenable. That has to change.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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