Trump Health Policies Thrust Drug Pricing, Access Back into Spotlight

September 27, 2020

Even advocates of U.S. drug pricing reform recognize that President Trump's revised initiative to reduce the price of prescription drugs is unlikely to save money for consumers or the government.

With little more than a month to go until the national election, President Trump announced a revised initiative designed to reduce what consumers pay for prescription drugs, while also promising to protect coverage for preexisting health conditions. However, analysts noted that administration-backed legal challenges to the Obama administration’s Affordable Care Act (ACA) stand to eliminate health benefits for millions, even as Americans face a critical need for health care under the threat of infection by COVID-19.

Most surprising is the President’s plan to distribute a $200 drug benefit card to seniors. The cards would help pay prescription drug co-pays for 33 million Medicare beneficiaries, at an estimated cost of $6.6 billion. Because the initiative is unauthorized and unfunded, the administration proposes to implement the benefit through a demonstration program and to cover the cost with anticipated savings from its earlier plan to link Medicare drug reimbursement to a “most favored nation” calculation based on lower drug prices in Europe. Without that program, though, which has not been enacted, there are no Medicare funds to support the discount cards. Earlier, the press reported that President Trump had proposed that pharma companies underwrite $100 discount cards for seniors in exchange for the administration dropping the plan to link U.S. drug prices to those overseas, but that manufacturers had rejected that plan. This new drug card proposal is even less attractive to industry and likely to be challenged in court if it does move forward.

Separately, the administration promoted consumer access to less costly medicines from abroad in finalizing its Safe Importation Action Plan that permits states to import certain drugs from Canada. A final regulation issued September 24, 2020 authorizes states, Indian tribes and possibly pharmacies and wholesalers to create their own import plans, which must meet FDA standards and gain agency authorization. Importation programs can cover drugs approved by Health Canada, but not many of the most expensive biotech therapies – making it difficult for the plans to meet the requirement of providing “significant cost reductions” to American consumers. The process is complicated, potential savings are unclear, and its impact is expected to be minimal.

FDA advanced the administration’s drug import program by publishing a final guidance outlining the standards and procedures for drug manufacturers to be able to import their own products approved for overseas sale. The advisory specifies the process for pharma companies to obtain a National Drug Code for certain FDA-approved prescription drugs that are manufactured and intended for sale in a foreign country to permit the firm to offer these products at lower prices in the U.S. When originally proposed last July, analysts predicted that few pharma companies were likely to implement this program and that it was not expected to have any impact on the U.S. pharmaceutical market. But consumers facing high out-of-pocket costs for medicines often see drug import programs as an appealing way to gain access to less expensive drugs.

Indications that the White House aims to distribute “some” of the $200 drug discount cards before the Nov. 3 election, despite unclear funding or authority, drew sharp rebukes from Democrats that the President was promoting non-existent savings on pharmaceutical outlays merely to attract voters. Even advocates of U.S. drug pricing reform recognize that the current Trump proposals are unlikely to save money for consumers or the government, and believe that it’s more important for the administration to focus its health-related efforts on combatting the COVID-19 pandemic.