5 things to know about Trump’s plan to lower drug prices

President Donald Trump delivered a speech Friday outlining his proposals to lower the cost of prescription drugs, several of which fall in line with the pharmaceutical industry’s own goals on intellectual property and price controls overseas.

As a candidate, Trump had criticized pharma companies for “getting away with murder.” In his remarks, he did bash the industry’s lobbying power while also lumping in insurance companies, distributors and pharmacy benefit managers (PBMs) as part of the “broken system” that has sent drug prices soaring.

He also mentioned in his speech that HHS Secretary Alex Azar, who will be taking the lead on implementing Trump’s priorities into regulations, has strong ties to this industry from his time as an executive at Eli Lilly.

“We are not going to reward companies that constantly raise prices, which, in the past, has been most companies,” Trump said. “Frankly, Alex used to run one of them, so nobody knows the system better than Alex.  That’s what we needed.”

Here are five major parts of the plan as well as reaction to the speech from Democrats, consumer advocates and healthcare groups:

1. Hints at price negotiation

Allowing Medicare Part D to negotiate on drug prices has been opposed by Azar, who said it would create a national formulary like European health system. While Trump himself seemed to supporting the idea as a candidate, his plan doesn’t fully endorse Part D negotiation, but rather says it will give Part D plans “new tools” to negotiate lower prices for some drugs and use Part D incentives to encourage drug companies to keep prices low.

The plan does appear to be a major endorsement of price transparency. Among its proposals are numerous suggestions on making pricing information more easily accessible, such as requiring an annual statement of price hikes for Part D plan members and exploring a requirement for pharma companies to include how much a drug costs in their advertisements.

2. PBMs were a big target

Rather than going after the pharma companies themselves, Trump seemed to save his harshest rhetotic for the companies that negotiate with drugmakers to reduce prices for insurers and employers.

“We’re very much eliminating the middlemen,” Trump said. “The middlemen became very, very rich. Whoever those middlemen were, and a lot of people never even figured it out, they’re rich. They won’t be so rich anymore.”

Few concrete proposals are included in Trump’s plan, however, though among the potential actions it listed was requiring PBMs “to act in the best interests of patients.” In his speech, Trump also mentioned ending “dishonest double-dealing” where PBMs don’t pass on rebates meant for patients.

The Pharmaceutical Care Management Association (PCMA), which represents PBMs, was largely supportive of Trump’s blueprint, but argued its members aren’t to blame for high prices.

“PBMs have long encouraged manufacturers to offer payers alternative ways to reduce net costs. Simply put, the easiest way to lower costs would be for drug companies to lower their prices,” PCMA said.

3. Holding the line on 340B

Under Trump’s CMS, the agency slashed $1.6 billion in payments to hospitals under the 340B drug discount program, which Republicans have attacked as growing beyond what Congress intended and research finding hospitals haven’t used the discounts to help low-income patients.

Trump mentioned this action as one way his administration has already moved to lower drug prices. In the plan’s outline, 340B is mentioned twice: first suggesting 340B hospitals use their discounts on care for low-income and vulnerable patients, along with a budget proposal ensure hospitals providing more than 1 percent of their patient costs in charity care retain their 340B discounts.

The American Hospital Association, which is suing to block the 340B cuts, urged Trump to “oppose any efforts to scale back” the program, calling it “a critical tool in the toolbox that provides drugs at lower prices to those on the front lines of patient care.”

4. Pharma priorities

For all the rhetoric on pharma’s lobbying power, Trump’s plan also includes several provisions which the industry has long supported. For one, it blames higher U.S. prices in part on “foreign freeloading” where other high-income nations with more highly regulated or completely nationalized healthcare systems have tighter cost controls.

The plan said several agencies, including the U.S. Department of Commerce and the U.S. Trade Representative will work on developing “the knowledge base necessary to address the unfair disparity between the drug prices in America and other developed countries.”

Consumer advocacy group Public Citizen said this provision would do “nothing for American consumers but forcing more rationing overseas,” calling the plan as a whole a “sweetheart deal” for pharma.

“Instead of making medicines less accessible for people around the world struggling to afford their own health care, the White House should do three things: challenge the industry with full negotiation powers for Medicare, block price spikes and curb monopoly abuse,” said Peter Maybarduk, director of Public Citizen’s Access to Medicines program.

5. Industry seems unconcerned; Democrats quick to bash plan

The reaction from healthcare groups largely stuck to stakeholders saying they’re pleased the Trump administration wants to address high drug costs. America’s Health Insurance Plans (AHIP) was one of the few groups expressing some limited concerns, saying requirements to pass along drug rebates to Medicare patients at the pharmacy counter may lead to manufacturers raising prices.

Democrats in Congress weren’t impressed. Sen. Patty Murray, D-Washington, said it was “more of the same” from Trump, offering few substantive proposals. Sen. Ron Wyden, D-Oregon, said much of the plan amounts “to ask drug companies nicely to lower their prices with zero accountability” while helping them make more money overseas.

“They’re breathing a sigh of relief in pharmaceutical board rooms across the country,” Wyden said. “Today’s announcement is a far cry from what Trump called for when he said the drug companies were ‘getting away with murder.’ It’s still open season for drug companies to set astronomical prices that families can’t afford.”