Trump's Plan to Lower Drug Prices Includes Encouraging Biosimilar Competition

This afternoon, President Donald Trump delivered a long-anticipated speech on reducing the price of drugs for American patients.

Trump has long decried the high cost of drugs, and called reducing prices one of his “greatest priorities” in his 2018 State of the Union address. In today’s remarks, delivered from the White House’s Rose Garden, the President outlined the broad strokes of what he called “the most sweeping action in history to lower the price of prescription drugs for the American people.”

Trump said that he has instructed HHS Secretary Alex Azar to initiate reforms that will “derail the gravy train” that encourages higher drug prices, give Medicare Part D more ability to negotiate drug prices, provide incentives to keep prices for Medicare low, end practices that “allow the middleman to pocket rebates and discounts that should be passed to patients, “[get] tough on drug makers that exploit our patent laws,” and speed approval of over-the-counter drugs.

Trump ended his remarks by stating that he has directed United States Trade Representative Robert Lighthizer to end what he termed global freeloading by companies that sell US-made drugs at lower costs than are available in the United States. “It’s unfair, it’s ridiculous, and it’s not going to happen any longer.”

Secretary Azar added in his own comments that the President’s plan focuses on private-sector negotiation and competition, and said that 1 feature of the plan would potentially require drug makers to disclose list prices for their products in their direct-to-consumer advertising, saying, “If we want to have a real market for drugs, why not have them disclose their prices in the ads, too?”

In a press briefing following the Rose Garden remarks, Azar added that drug list prices are “material and relevant” for patients to known as they make treatment decisions with their providers.

List prices may also be held down by such strategies as exempting pharmaceutical products from specialty tiers if their prices haven’t been raised in the previous 18 months. Azar also proposed reconsidering the role of pharmacy benefit managers (PBMs) in negotiating drug prices, suggesting that they could be required to use fixed prices rather than being allowed to receive undisclosed rebates from manufacturers.

Many of the administration’s proposals, said Azar, can be achieved by executive order, though he voiced a hope that Congress would work with the administration in a biparsitan fashion to achieve these reforms.

A related document, HHS’ “American Patients First” blueprint for implementing Trump’s vision, includes the following strategies for achieving the administration’s goals:

Improving competition by asking FDA to issue guidance on how manufacturers use Risk Evaluation and Mitigation Strategy (REMS) programs to delay competition and promoting the availability and adoption of generics and biosimilars. Scott Gottlieb, MD, Commissioner of the FDA, added in a separate statement that the FDA will soon release its Biosimilar Action Plan to help facilitate the development and approval of biosimilars.

Improving negotiation by encouraging value-based care models, allowing Medicare Part D plans to adjust their formularies mid-year, providing Medicare the flexibility to negotiate for high-cost drugs under Part D, evaluating indication-based pricing, reporting to the President on which drugs could be moved from Part B to Part D, addressing the disparity between US and international drug prices.

Lowering list prices by asking FDA to evaluate including list prices in direct-to-consumer advertising, directing Medicare and Medicaid to make their prices more transparent, and developing proposals concerning the Affordable Care Act’s maximum rebate amount provision.

Reduce out-of-pocket (OOP) spending by ending so-called “gag clauses” that keep pharmacists from telling consumers when they could pay less for a drug OOP than through their health plan, and requiring Part D plans sponsors to provide information about price increases.

Further actions that HHS says are under consideration include improving the efficiency of the biosimilar and interchangeable biosimilar approval process, improving the utility of the FDA’s Purple Book to all stakeholders, educating providers and patients about biosimilars to instill confidence, and improving guidance on demonstrating interchangeability of biosimilars.

Stakeholders from across the healthcare landscape responded to the plan, with the American College of Rheumatology’s president, David Diakh, MD, calling action on drug pricing “long overdue” in a statement, and the Association for Accessible Medicines praising the President’s embrace of biosimilar competition as a tool to lowering costs. Juliana M. Reed, President of the Biosimilars Forum, also weighed in, saying, “We were pleased that the plan specifically notes the FDA’s recently launched education initiative, demonstrating that it prioritizes raising awareness about the potential of biosimilars to lower costs while providing the same safety and effectiveness as their reference biologic drugs.”

Advocacy group the Alliance for Transparent and Affordable Prescriptions told The Center for Biosimilars^® in an email that the organization is “pleased that President Trump addressed the PBM problem, and the rebate system specifically, in his speech today on drug prices,” but added that “we will not celebrate until more concrete action is taken” on what it terms "PBM abuse."

Despite the administration’s suggestion that “middlemen” such as PBMs will take a more limited role in the healthcare system under the blueprint, PBM Express Scripts said in a statement that it looks forward to working with the administration on “pro-patient, pro-payer policies,” and added that it has acted as “a champion in the fight to lower drug costs,” and that “our role has never been more important to improving healthcare.”