Brooks Blog

Wednesday • February 14, 2018

Drug Pricing Wars Alive, and Well?

Recent budget proposals and a white paper released from the White House include a fresh emphasis on lowering drug prices using methods that could have pharmaceutical manufacturers losing sleep.

The recent proposals include some changes such as offering free generics to seniors, capping out of pocket expenses, and moving some drugs to Part D so the price for those drugs can be negotiated by a third party such as a PBM. Additionally, one proposal is to allow pilot Medicaid programs to negotiate drug prices.

On the other hand, the days of patients paying PBMs and insurers far more for a drug than manufacturers sold them for could be over: if Trump’s proposal became law, insurers and PBMs would be required to pass rebates and discounts issued by manufacturers onto the patient, lowering the cost of a prescription to patients without hindering manufacturers’ bottom line.

Brooks Insights: After a year of little to no focus on drug pricing from the federal government–despite strong statements by Trump during the campaign–this is the first signal that those statements could be followed up with policies aimed at manufacturers’ bottom line. At the same time, the white paper recognizes the role lower drug prices overseas plays in higher drug costs in this country. While the white paper argues for innovation and less regulation, President Trump is, according to Health and Human Services Secretary Alex Azar, “firmly committed” to reducing drug prices. Although a President’s budget proposal is rarely signed into law, it does suggest a renewed focus on this sticky issue.

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