Trump says drug companies to announce 'massive' price cuts soon

[May 31, 2018]  By Yasmeen Abutaleb and Steve Holland

WASHINGTON (Reuters) - President Donald Trump on Wednesday said he expects major drug companies to slash prices on their products in two weeks, but did not provide details on which companies would do so or how such reductions would be made.

Health care lobbyists in Washington said they were caught by surprise and had no idea what Trump was talking about.

"You're going to have some big news. I think we're going to have some of the big drug companies in two weeks said they're going to announce, because of what we did, they're going to announce voluntary massive drops in prices," Trump said at a signing ceremony for a new law making it easier for seriously ill people to try experimental treatments.

A Health and Human Services Department (HHS) spokeswoman said the agency had nothing else to share on Trump's comments because it didn't want to get ahead of any announcements.

Earlier this month, Trump unveiled the administration's plan to lower prescription drug prices, largely through regulatory authority, calling it "the most sweeping action in history" to reduce the cost of medicines for consumers.

But healthcare stocks rose as it became clear his administration avoided aggressive direct measures to cut prices.

HHS has yet to issue any new regulations or pilot programs to lower drug prices based on the new plan.

The NYSE Arca Pharmaceutical Index <.DRG>, comprised of major drugmakers, fell about a quarter of a percent just after Trump's comments on Wednesday. But it steadily recovered and closed up 1.6 percent, while the broader S&P 500 Index closed up 1.3 percent.

It is exceedingly rare for drug companies to lower prices prior to facing competition from cheap generics.

President Donald Trump arrives prior to signing the "Right to Try Act," which gives terminally ill patients the right to use experimental medications not yet been approved by the Food and Drug Administration (FDA), at the White House in Washington, U.S., May 30, 2018. REUTERS/Leah Millis

Amid increased public and Congressional criticism over high drug prices, some companies pledged to voluntarily limit annual price increases to less than 10 percent. Previously, many drugmakers typically raised prices on prescription medicines twice a year, adding up to well over 10 percent.

As public pressure mounted, drug companies have blamed middlemen, including pharmacy benefit managers (PBMs) and health insurers, for not passing discounts and rebates they demand off high list prices to consumers.

PBMs and insurers have said they are part of the solution for lowering costs and blame pricing on drugmakers.

Trump campaigned on lowering drug prices and has said that pharmaceutical companies were "getting away with murder," but has since backed off that rhetoric.

PhRMA and BIO, the major lobby groups for the pharmaceutical and biotechnology industries, did not respond to requests for comment on Trump's statement. Several drugmakers contacted by Reuters did not return calls seeking comment.

(Reporting by Yasmeen Abutaleb and Steve Holland; Editing by Chizu Nomiyama and Bill Berkrot)

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