Trump Is Already Lowering Drug Costs for Millions
President Trump used his first State of the Union address to tout a lot of first-year accomplishments — including the tremendous progress his administration has already made in lowering drug prices for Americans. Unfortunately, these efforts remain scarcely reported.
CNBC reporter Angelica LaVito notes that even though the President “sporadically saber rattles about drug companies hiking prices,” he has not “pushed Congress to pass legislation that either would impose price controls or allow Medicare to negotiate better prices with pharmaceutical makers.” Other critics have echoed the sentiment. While the talking heads who favor of heavy-handed government intervention decry the president’s supposed inaction, millions of Americans are benefitting from the administration’s avoidance of price-setting.
Besides, the administration has proven that substantive action to lower drug prices needn’t come in the form of onerous Congressional regulations. It’s hardly breaking news that the executive has wide latitude in his oversight of the various health-care bureaucracies and regulators.
In his first year, Trump took steps to mitigate price-gouging and hold drug manufacturers accountable for overcharging the government. For example, state governments were overcharged by nearly $2 billion for EpiPens when Mylan incorrectly labeled the medication generic and used the distinction to avoid paying higher rebates to Medicaid programs. The administration took the company to task, forcing Mylan to reclassify their medication and pay $465 million to the Centers for Medicare and Medicaid Services (CMS). The Mylan case illustrates that taxpayers now have an administration with their best interests in mind.
CMS Administrator Seema Verma rightly pointed out that the settlement protects “access for Medicaid beneficiaries who rely on this lifesaving drug while saving hundreds of millions of dollars. This announcement puts drug manufacturers on notice.” CMS also deserves recognition for tackling the problem of middlemen in the drug industry.
Currently, pharmaceutical manufacturers negotiate discounts and rebates on drugs to health insurers and pharmacy benefit managers, who don’t pass the savings on to the consumer. Thus, even when drug manufacturers negotiate discounts, consumers continue to foot the bill. This is hardly surprising, due to the third-party payment system reinforced through regulations and the tax code. Under Verma’s leadership, the agency’s 2018 proposed rule for Medicare Part D included a Request for Information on how to address this problem — a critical first step toward untangling a messy system of indirect payments.
At the Food and Drug Administration (FDA), Commissioner Scott Gottlieb has made increasing access to cheaper generic drugs a priority. As President Trump pointed out in his speech, “to speed access to breakthrough cures and affordable generic drugs, last year the FDA approved more new and generic drugs and medical devices than ever before in our history.”
All of this is having a dramatic effect. For the first time in five years, Medicare Part D premiums are projected to decline in 2018. This decline comes even as health premiums have been rising by double-digits in both employer and individual insurance markets. Lessening Medicare premiums will mean less costly co-payments as well — a boon to seniors with meager means. According to CMS, seniors should expect to pay at least $320 million less out of pocket for drugs at hospitals this year alone. Even small actions by the administration are sending a signal to pharmaceutical companies that the gravy train has left the station.
These initiatives are just the beginning. Of course, the real key to bringing down costs across the health-care industry isn’t a big splashy piece of legislation — and it’s certainly not more government interference. The goal should be to continue to rein in government by eliminating some of the worst parts of Obamacare — as Congress did with the individual mandate and should do with the Independent Payment Advisory Board.
America is finally poised to reform its health-care system in meaningful ways. If the Trump administration continues to make changes that give consumers more control over their health-care dollars, low prices will follow for millions of Americans.
David Williams is the President of the Taxpayers Protection Alliance.
