WASHINGTON - Before taking office, President Donald Trump railed against the pharmaceutical industry and accused it of “getting away with murder.”
The populist rhetoric appears to be giving way to a more nuanced strategy focused on making the pharmaceutical market more open and competitive, with the aim of lowering costs for consumers.
It’s an approach that could avoid a direct confrontation with the powerful pharmaceutical lobby, but it could also underwhelm Americans seeking relief from escalating prescription costs.
On Friday, Trump is scheduled to give his first speech on an overarching plan to lower drug prices. Administration officials previewing the speech Thursday touted it as the most comprehensive plan to tackle prescription drug costs that any president has ever proposed, but offered few specifics.
Officials said the plan would increase competition, create incentives for drugmakers to lower initial prices and slash federal rules that make it harder for private insurers to negotiate lower prices. The result would be lower pharmacy costs for patients — a key Trump campaign promise.
The plan will not include giving the federal Medicare program power to directly negotiate prices with drugmakers, they noted. Trump campaigned on the idea, which is vigorously opposed by the pharmaceutical industry.
Public outrage over drug costs has been growing for years, because Americans are being squeezed in a number of ways: New medicines for cancer and other life-threatening diseases often launch with prices exceeding $100,000 per year. Drugs for common ailments like diabetes and asthma routinely see price hikes around 10 percent annually. Meanwhile some companies have been buying up once-cheap older drugs and hiking prices by 1,000 percent or more.
Since entering the White House, Trump has backed away from reforms directly targeting drugmakers and staffed his administration with appointees who have deep ties to the industry, including his health secretary, Alex Azar, a former top executive at Eli Lilly.
Still, administration officials ratcheted up the rhetoric ahead of Trump’s speech. Azar promised bold action. FDA Commissioner Scott Gottlieb — another Trump appointee with industry connections — hinted at a plan to “dismantle” the convoluted system of discounts and rebates between drugmakers and health care middlemen.
On Thursday, administration officials also vowed to address foreign governments that rely on U.S. medicines but pay drastically lower prices due to government controls. The U.S. accounts for 70 percent of the world’s brand-name drug profits, according to a White House report released earlier this year.
Here are some of the drivers of U.S. prescription drug prices, proposals for reducing the costs and what’s at stake:
Lack of regulation
Drugmakers generally can charge as much as the market will bear because the U.S. government doesn’t regulate medicine prices, unlike most other countries.
Medicare is the largest purchaser of prescription drugs in the nation, covering 60 million seniors and Americans with disabilities, but it is barred by law from directly negotiating lower prices with drugmakers. Democrats have long favored giving Medicare that power, but Republicans traditionally oppose the idea.
The powerful pharmaceutical lobby has repeatedly fended off proposals that could lower prices, such as Medicare negotiations or importing drugs from countries that regulate pricing.
With no direct government price regulation, the primary check on prices comes from buyers in bulk — such as insurance companies and pharmacy benefit managers, which handle prescription coverage for insurers, employers and other big clients.
But because there are so many players in the fragmented system, the discounts achieved in the U.S. are generally far more modest than those in other countries.
The result is that the U.S. spends more on medicines than any other nation. In 2015, the U.S. spent $1,162 per person on pharmaceuticals, according to the Organization for Economic Cooperation and Development. That compares with $756 for Canada and $497 for the United Kingdom, both of which have government measures to control drug prices.
Lack of transparency
The U.S. system for pricing drugs is notoriously complex, so much that the “real” price for most medicines isn’t clear. Critics contend that this lack of transparency limits competition and drives prices higher.