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'Eliminating the Middlemen': Trump Takes Aim at PBMs in Drug Pricing Speech

News  |  By Jack O'Brien  
   May 11, 2018

The president outlined his plan to lower prescription drug costs and aid low-income Americans by reshaping Medicare and boosting competition.

President Donald Trump delivered his long-awaited speech Friday on prescription drug prices, promising to focus the administration's attention on four key strategies to make trips to the pharmacy less expensive for consumers.

Trump's plan seeks to eliminate what he described as the "dishonest double dealing" of healthcare middlemen, such as pharmacy benefit managers (PBMs), to receive rebates and discounts, instead aiming to have those savings redirected to consumers and patients.  

"We're very much eliminating the middlemen," Trump said. "The middlemen became very rich. They won't be so rich anymore."

The president also directed the Department of Health and Human Services to allow more substitution through Part D for single-source generics, require health plans to share a minimum portion of drug rebates with patients, and limit Part B price increases above the inflation rate.

Related: Trump's Drug Pricing Plan Praised, Panned, Parsed

Trump also acknowledged the multifaceted challenge to high prescription drug prices, noting that the solution must come from both the private and public sectors.

"Everyone involved in the broken system—drug makers, insurance companies, distributors, pharmacy benefit managers, and many others—contribute to the problem," Trump said. "Government has also been part of the problem because previous leaders turned a blind eye to this abuse."

While the Trump administration laid out "sweeping" reforms regarding drug pricing, industry members remain skeptical as to the effectiveness of the plan.

Below are four takeaways from the policy proposals introduced by the president:

1. PBMs and status quo in the crosshairs

The administration is questioning the current rebate system for PBMs, aiming to restrict its use in the future, and seeking formal input on how to restructure it, Azar said.

  • In the plan, the administration correlates the "hidden negotiation and wealth transfer" from drug manufacturers to PBMs with the increase in out-of-pocket costs for consumers.

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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