Is Trump's vow to cut drug prices finally turning to action? Azar says yes

The president is again turning his thoughts to cutting drug prices, and at least one analyst thinks that this could be bad news for drugmakers.

Administration officials in a press briefing said the president will lay out out a number of measures in the next week to do just that in his budget proposals. Bloomberg reported that they may include such ideas as making generics free to seniors, capping out-of-pocket expenses and moving some very expensive drugs from Medicare Part B to Part D, where program administrators have the authority to negotiate prices.

“This is a top, top priority for the president,” Mick Mulvaney, director of the Office of Management and Budget, said in the press briefing that also included newly confirmed HHS Secretary Alex Azar. Mulvaney said the administration plans to attack drug pricing “with the same zeal and vigor that you saw on taxes.”

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While the president came to office talking tough about drug prices, so far little has materialized and most investors have shrugged off any threat. And a budget agreement reached by Congress late Thursday night may sideline the president’s priorities. But Wells Fargo analyst David Maris indicated in a note to investors that it may be time to sit up and listen.

While there were a few proposals the industry might benefit from, he told clients, “based on the details laid out so far to the press of the preliminary plans, we believe this has potential negative implications (and maybe one or two positives) for the drug industry.”

The industry might benefit from “true co-pay limits,” since prescriptions often go unfilled because of high-copays, Maris said. Another proposal that touches on a hot button item for the industry is reducing costs for Medicare Part D beneficiaries by allowing them to share in rebates that drug companies pay to insurers and other middlemen, something that Big Pharma has pointed to as a prime reason for high drug prices.

Free generics, however, might be a problem, Maris said, as would the possibility of allowing some states though a pilot program to negotiate drug prices directly with manufacturers for their Medicaid formularies.

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The PCMA, the pharmacy benefit managers’ lobby group, was quick to throw cold water on that idea. Saying it supported ideas that promote generics and cut some “high drug prices” via Medicare and Medicaid, it argued that the proposal to require Medicare Part D plans to use rebate savings to lower out-of-pocket costs, running “contrary to the administration’s goal to reduce drug costs. It would raise premiums for all seniors, help only 10 percent who take certain drugs, and do nothing to improve things for low-income seniors, who already pay no cost sharing in Part D,” the PCMA statement said.

The fact that President Trump named Azar, a former top executive at Eli Lilly, as secretary of health and human services led many drug price critics to conclude he is not serious about bringing drug prices down. Azar, meanwhile, said in his confirmation hearing that drug prices in the U.S. are too high and fundamental changes are needed in the system to bring them down.

“The president is firmly committed in this space,” Azar said in the briefing. "We do think drug prices are too high.”