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Quest to Lower Drug Prices Pits Trump Against Formidable Opponents

News  |  By Christopher Cheney  
   March 06, 2017

Aiming to significantly reduce medication prices presents the president with golden opportunities and a set of daunting challenges, healthcare industry experts say.

This is part of a series covering the Shaping of Healthcare's Future in the Trump era.

President Donald Trump has said medication prices are too high and he plans to address the problem.

During his presidential campaign, Trump called for Medicare to negotiate drug pricing. In January, the president criticized the lobbying efforts of pharmaceutical companies and suggested again that the federal government should negotiate drug prices.

Although he faces high hurdles, the president appears to be on the right track, says Olusegun Ishmael, MD, MBA, an emergency room physician at Paris Community Hospital in Paris, IL, and former insurance company executive.

"The biggest insurer in this country is the U.S. government—between the Veterans Administration, Medicaid, and Medicare. The government should do the same thing that UnitedHealthcare and all the Blues do to negotiate pricing based on their volume," he says.

Insurers and foreign governments have been leveraging their purchasing power to negotiate drug prices for decades, Ishmael says.

"If someone walks into CVS or Walgreens without insurance and wants to get a prescription, they will pay almost twice as much as the UnitedHealthcare pricing. The reason is volume—it is a numbers game. As an insurer, when I have a certain amount of volume, I go to my pharmacy benefit management company and say, 'I am bringing you a million lives.'"

Political Hurdles
Although allowing government agencies to negotiate drug prices makes sense from an economic perspective, it would present the president with a harsh political reality: "Pharma is one of the biggest lobbying groups in the country, so this would be a hard change," Ishmael says.

Even with fellow Republicans controlling Congress, Trump will struggle to convince GOP lawmakers to pass legislation that would allow the government to negotiate drug prices, says Erin Fox, PharmD, director of the Drug Information Service at Salt Lake City, Utah-based University of Utah Health Care.

"Republicans controlled both houses of Congress under most of President Obama's administration, and they did nothing then," she says.

"It is not realistic to think that anything really significant will be done to achieve meaningful drug-pricing regulations unless there is some type of 'nuclear option' such as Trump supporting a single-payer approach to healthcare and dissolving every insurance company in the country. I doubt he could do that."

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Any regulatory route that the White House pursues to reduce drug prices would encounter a robust roadblock in Congress, Fox says.

"A lot of Republicans, especially the Tea Party Republicans, are against regulations. So, it is very unlikely that new regulations will be adopted, even if they could do some good."

In fact, President Trump signed an executive order in February designed to cut what he called "job-killing regulations."

Importation of Drugs Problematic
There are some regulatory approaches to reducing drug prices that the Trump administration should avoid, Ishmael and Fox say.

"There has been talk of buying drugs from overseas—that gives me an ulcer," says Ishmael, who is a first-generation immigrant and holds dual American-Nigerian citizenship.

"Part of my concern about importing medication from outside the country is we would have to create another layer of bureaucracy to investigate these drugs to make sure they are safe."

"I have lived and worked in a Third World country," he says. "Medications that you get in a Third World country are not like the medications you get here. They are often selling you pretty much a placebo."

Even importing brand-name medications from countries such as Canada is a poor price-reduction strategy, Fox says.

"The reason Canada's drug prices are cheaper is because they have a single-payer healthcare system and they negotiate prices."

"Drug companies are not stupid" she says. "They know exactly how many drugs they sell to Canada, and they are not going to sell more than that to Canada just because Americans want to buy cheaper drugs from Canada."

Non-Regulatory Options
There are non-regulatory approaches to reducing drug prices that Trump could try.

Changing mindsets among frontline caregivers should be much easier than changing legislation, Ishmael says. One example he cites is the EpiPen, a medication delivery device for allergic reactions that spurred price-sticker shock last year.

There is no justifiable economic rationale for an EpiPen two-pack to cost $600, he says. "An EpiPen should not cost more than three bucks. Epinephrine is generic. It costs not more than 25 to 50 cents if you draw the drug out of a container. The syringe costs less than a dollar."

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For patients at risk of severe allergic reactions, healthcare-provider organizations should start selling low-cost syringes with single doses of epinephrine in the physician-office setting, Ishmael says.

Cajoling pharmaceutical companies to increase transparency in the marketing and pricing of medications also could be a promising non-regulatory strategy for Trump to pursue, Fox says.

The pricing of medications is analogous to pricing in the automotive industry, where very few people pay the manufacturer's suggested retail price.

"Unfortunately, there are some people who have to pay the list price. Those are the people with the high-deductible health plans, or the patients without insurance who can't qualify for coupon cards that people with insurance can get," she says.

"Transparency would certainly help the conversation. It would help people understand what's going on and point toward fixes. It would help people understand there is a need for fixes."

"There are some people in Congress who think the system we have works fine." Fox says. "[They say that] this is capitalism and drug manufacturing is a business, where profits are part of the business. The problem is that people's lives are at stake."

The Perils of Playing Politics
The Trump administration needs to plan and act carefully to make significant progress in lowering drug prices, which poses a challenge for the man in charge, Fox says. "He is shaking things up, but the uncertainty that his style brings is potentially detrimental to the healthcare industry."

Furthermore, Trump should avoid nominating a leader of the Food and Drug Administration (FDA) who harbors hostility toward the agency's regulatory role, she says.

"Even in the drug industry, they don't want Trump to appoint a guy who will take away all the rules at FDA. Even the drug industry is saying we need those rules to keep people safe. I cannot imagine a world where medicines are released to the public without any efficacy data to know whether they work."

Playing politics with drug pricing is a potentially deadly sport, Ishmael says.

"It is a trillion-dollar industry. Everybody is in it to make a buck. It is very political, and that is my concern. Between the lobbying firms and our legislators all the way up to Congress and the presidency—who are not providers of care—they are trying to make decisions about healthcare but they are not involved in the day-to-day management of healthcare.

"I have a big concern about politicizing healthcare and patients' lives because the right people who should be making those decisions are not sitting at the table," he says.


Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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