Under the proposed rule, the government would create an
"international pricing index" to help Medicare pay prescription drug
prices that are more closely aligned with those of other countries.
The government health insurance program for the elderly and disabled
covers more than 40 million Americans.
"We're taking aim at the global freeloading that forces American
consumers to subsidize lower prices in foreign countries through
higher prices in our country," Trump said in a speech at the
Department of Health and Human Services.
"The world reaps the benefit of American genius," said Trump, who
has pledged to lower prescription drug prices.
Healthcare and high prescription drug prices have consistently
polled as top voter concerns ahead of Nov. 6 elections where Trump's
Republicans are battling to maintain control of Congress.
The administration said it did not plan to propose the rule until
next spring, and would begin implementing it in 2020 over a
five-year period.
Enacting the rule does not require congressional approval, but it
was met with swift opposition from drugmakers and would likely be
challenged by many stakeholders in the healthcare industry.
By law, the Medicare program cannot negotiate drug prices. Under the
Trump administration proposal, private-sector vendors would
negotiate down drug prices and supply the medicines to doctors and
hospitals.
HHS said the proposed rule would cover most of the drugs in
Medicare's Part B, which includes expensive physician- administered
drugs such as infusions.
According to HHS projections, the rule, if it took full effect,
would save $17.2 billion over five years, which would benefit the
federal government and Medicare beneficiaries.
Trump has criticized foreign governments with single-payer
healthcare systems, such as the UK and France, that are able to
negotiate prices directly with drug companies and often pay far less
for the same medications than the United States.
The United States does not directly negotiate drug prices with
manufacturers and American consumers often pay the highest prices
for drugs. The Trump administration has said U.S. drug prices and
manufacturer revenues are subsidizing lower prices in other
countries.
In a briefing with reporters on Thursday, HHS Secretary Alex Azar
said the administration planned to first test the rule in 50 percent
of the country, applying it to drugs in Part B that have a single
manufacturer.
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The proposed rule would also eliminate an add-on payment that
physicians receive from Medicare that the administration and critics
say encourages the prescribing of higher-priced drugs.
'FOREIGN PRICE CONTROLS'
Previous similar attempts at such rules in Medicare have come up
against fierce industry opposition and failed to take effect.
Shortly after Trump's speech, pharmaceutical industry lobby group
PhRMA said it opposed the changes, which it said would limit access
to drugs for cancer and chronic conditions like rheumatoid
arthritis.
"The administration is imposing foreign price controls from
countries with socialized health care systems that deny their
citizens access and discourage innovation," PhRMA Chief Executive
Stephen Ubl said in a statement.
Democrats questioned the timing of the administration's proposal and
expressed skepticism it would come to fruition.
"It's hard to take the Trump administration and Republicans
seriously about reducing health care costs for seniors two weeks
before the election," Democratic Senate Minority Leader Chuck
Schumer said in a statement.
The United States spent nearly $26 billion for Medicare Part B drugs
in 2016, the most recent year for which data is available.
The top drugs that year were Regeneron Pharmaceuticals Inc's
chemotherapy drug Eylea, Roche Holding AG's cancer and rheumatoid
arthritis treatment Rituxan and Amgen Inc's Neulasta, which helps
reduce the risk of infection during cancer treatment. Medicare
spending on the three drugs alone totaled more than $4 billion.
Representatives from the three companies did not immediately respond
to requests for comment on the plan.
Shares of U.S. drugmakers opened trading down early on Thursday, as
Politico had reported details of the plan overnight. But shares
recovered later in the day, and the ARCA pharmaceutical index was up
about 1.8 percent on Thursday afternoon.
(Reporting by Yasmeen Abutaleb; Writing by Michael Erman; Editing by
Susan Thomas and Peter Cooney)
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