Trump and Drug Prices
Season 1: Episode 66
September 15, 2020
Photo via U.S. Department of Homeland Security
Lowering prescription drug prices continues to be one of President Trump’s top goals. What has he actually accomplished thus far?
Listen to the full episode and read the transcript below.
This episode is part of a special series examining the goals, actions and impacts of President Donald Trump and former Vice President Joe Biden’s health policies. See all of our reporting for that series here.
Dan Gorenstein: It’s Day 2 of our weeklong look at the goals and impacts of President Trump’s health care policies.
Today, we dig into one of the president’s favorite topics — drug prices — something he’s still pushing hard as the election approaches.
From the Annenberg Studio at the University of Pennsylvania, I’m Dan Gorenstein, and this is Tradeoffs.
DG: In one word or phrase, how would you characterize the president’s efforts in this area?
Ben Ippolito: Ambitious. And if I’m allowed maybe two words, ambitious, but also a bit underwhelming in practice.
DG: Ben Ippolito is an economist with the conservative American Enterprise Institute and an expert on drug pricing.
BI: At a high level, the Trump administration’s primary goal has been reducing drug prices paid within the U.S.
President Trump: My administration is launching the most sweeping action in history to lower the price of prescription drugs for the American people.
DG: The president unveiled his “Blueprint To Lower Drug Prices” in 2018.
While it’s fair to say that plan has fallen short of “the most sweeping action in history,” it has led to several of the president’s boldest proposals.
Like tying the price Medicare pays for certain drugs to what other Western countries pay, an idea called international reference pricing.
BI: That would be a seismic shift in the way drug pricing policy works in the US. And it also represents a huge break with what Republicans traditionally propose on these kinds of issues.
Sen. Chuck Grassley: We must allow competition – not government mandates – to drive innovation, curb costs.
BI: The main concern, of course, that comes up with this is that we are the country where drugmakers recoup their biggest profits, and so we drive most of the innovation. And so much of the concern about the proposal is that on one hand, we would pay much lower prices. In many cases, we’re talking about half as much or even less. But would we be faced with this question of getting fewer drugs in the future? And is that tradeoff worth making?
DG: With just a few weeks before the election, the president has issued a follow-up executive order piloting the international reference pricing plan in Medicare.
Drugmakers are up in arms, threatening to go to court already.
Do you think this pilot program will actually come to pass?
BI: I think there’s a lot of pressure to show that they’ve actually done something constructive here. And so this may be the last ditch attempt to actually make something big happen before the actual election. That said, I think at this point it’s so late in the game that it’s hard to imagine it actually getting into effect before the election that you’d have to say that the priority here is probably politics over policy.
DG: So putting international reference pricing aside, Ben, what other policies has the administration pursued to lower drug prices?
BI: In addition to international reference pricing, they’ve also tried to help states with importing drugs from other countries. The Trump administration actually directed the secretary of HHS to help the state of Florida in efforts to import drugs from other countries.
Trump: I’d also like to ask the governor of Florida, Ron, are you going to come up and say a few words and we’ll sign up and you’ll go out and buy those drugs and say 50 or 60 percent for the people of Florida.
BI: And that proposal hasn’t really gone into effect yet. In addition, one of perhaps the most notable proposals was what was known as the rebate rule.
News clip: A big move that essentially bans drugmakers from giving money in the form of rebates to a middleman known as pharmacy benefit managers and insurers.
DG: Let’s break down the rebate rule for a second.
Historically, drugmakers have cut deals with insurers and those middlemen.
Critics of this practice — including the Trump administration — worry this encourages drugmakers to inflate prices and offer more generous rebates.
While rebates certainly help lower premiums, they arguably are even more lucrative for the pharmacy benefit managers and insurers.
President Trump, instead, wanted to see rebates go directly to consumers.
Trump: Our plan will end the dishonest double-dealing that allows the middleman to pocket rebates and discounts that should be passed on to consumers and patients.
DG: Like international reference pricing, this rebate rule has not gone into effect. The administration pulled the proposal in July 2019 over criticism that it would raise premiums.
The president likes to say that drug prices have gone down on his watch. And this is the first time this has happened in decades.
Trump: For the first time in 51 years, the costs of prescription drugs actually went down.
DG: Ben, have drug prices actually gone down? And if so, can we point to the Trump policies as the cause?
BI: Well, it is true that some prices, some drug prices have at least grown more slowly in recent years than they historically have. Most drug prices have not actually gone down. It’s hard to assign any reductions or slow down on drug pricing to specific policies from the administration, in large part because most of the policies haven’t gone into effect.
DG: One thing that has happened at the FDA, the Food and Drug Administration, is that we’ve seen the process of drugs getting approved, sped up, more drugs have gotten approved, arguably increasing competition. Ben, do you think that has anything to do with some of the slow down of the increase in prices that we’ve seen?
BI: So I think the FDA does deserve some recognition here. They’ve approved a record number of generic drugs in each of the last three years. So 2019 saw the approval of over 1,000 generics. That said, the FDA can approve a drug but they can’t approve that it actually quickly hits the shelves.
DG: You know, there’s been also, perhaps surprisingly for a Republican administration, there’s been a lot of rhetoric out of the White House taking on drugmakers, challenging drugmakers, saying that they’re ripping people off.
BI: Yes. What the White House is proposing in some respects is actually quite a bit closer to what people like Nancy Pelosi, Speaker Pelosi, have proposed on drug pricing recently.
Speaker Nancy Pelosi: It stops drug companies from ripping off Americans while charging other countries less for the drug.
Trump: You can look at some of the countries, their medicine is a tiny fraction what the medicine costs in the U.S.A.
BI: And so it does create this very odd tension where on one hand, the White House is very outspoken on this issue. And it frankly seems like the biggest issue that resonates with the president himself. But at the same time, it puts them quite at odds with congressional Republicans who generally view these proposals very skeptically.
DG: It seems like that’s why there have been more executive actions than there has been actual legislation coming out around drug prices. Is that a fair characterization?
BI: Oh, absolutely. There’s there’s no question that if the White House really made an effort to push some of these proposals in legislation, they would be met with a lot of resistance.
DG: So when we think about and consider President Trump’s drug pricing legacy, what the impact his policies have had, is this potentially more like an assist in basketball where President Trump might not score the basket, but pass the ball to the next administration to score the hoop?
BI: If you want to enact policies like what we’re talking about, like changing the way we pay for drugs in Medicare, that requires a lot of thinking about mechanically, how do you even do that? This is a deceptively simple sounding policy, as many are. But like, it’s really complicated to implement even simple sounding things, right? It takes a lot of work to actually make that happen. And so the fact that they’re really digging into it, that’s a big thing.
DG: Ben, thank you very much for taking time to talk with us on Tradeoffs.
BI: Yeah, absolutely.
DG: You can learn more about President Trump and former Vice President Biden’s positions on prescription drug prices — along with several other health policies on our website.
Tomorrow, we’ll dig into President Trump’s policy efforts to change Medicaid.
Robin Rudowitz: Many of these proposals were designed to limit the scope of the Medicaid program.
DG: I’m Dan Gorenstein, this is Tradeoffs.
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- American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs (Department of Health and Human Services, 5/2018)
- On Drug Pricing, The President’s Numbers Are Still Off (Shefali Luthra, Kaiser Health News, 2/5/2020)
- Drug prices steadily rise amid pandemic, data shows (Sarah Owerhmole, POLITICO, 7/7/2020)
- Trump unveils plan to slash drug costs tied to what’s paid abroad (Sarah Owermohle, POLITICO, 9/13/2020)
- As He Woos Drugmakers on Virus, Trump Demands Drug Price Controls (Margot Sanger-Katz, Noah Weiland and Katie Thomas; New York Times; 7/24/2020)
- 10 FAQs on Prescription Drug Importation (Meredith Freed, Tricia Neuman and Juliette Cubanski; Kaiser FamilyFoundation; 3/19/2020)
- What are the recent and forecasted trends in prescription drug spending? (Rabah Kamal, Cynthia Cox and Daniel McDermott; Kaiser Family Foundation; 2/20/2019)