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President Trump Delivers Much Anticipated Drug Pricing Speech

On Friday, after weeks of delay, the President finally delivered his Drug Pricing Speech and released the HHS Blueprint detailing the Trump Administration’s plan to lower drug prices and reduce out-of-pocket costs.

The speech made pointed attacks on “the middlemen” and drug lobbyists. President Trump even called out Secretary Azar’s past role as a drug company executive when calling out drug companies’ role in high drug prices.

The HHS blueprint lays out the details of four overarching strategies to reduce prescription drug costs:

  1. Improved competition
  2. Better negotiation
  3. Incentives for lower list prices
  4. Lowering out-of-pocket costs

Proposals to meet these objectives include: (a) issuing guidance on REMS and promoting innovation and competition for biologics, (b) allowing Medicare Part D plans to adjust formularies mid-year if a drug manufacturer increases the price of a drug on the formulary, (c) reforming how Medicare Part B drugs are priced and potentially allowing Medicare Part D plans to negotiate prices for such drugs, (d) instructing CMS to make Medicare and Medicaid prices more transparent, (e) exploring value-based purchasing and pricing arrangements, and (f) prohibiting Medicare Part D plan contracts from preventing pharmacists from informing patients when they could pay less out-of-pocket.  It is unclear what (f) is targeting because Medicare Part D plan sponsors are required to include in their contracts with pharmacies a provision mandating that the pharmacy never charge the Medicare Part D member more than the price negotiated between the plan sponsor and the pharmacy.  Therefore unlike individuals covered by commercial insurance, Medicare Part D members do not pay co-payments that are higher than the cost of the drug.

However, for all the talk on foreign government freeloaders there is little information on how that will be addressed, other than cross-agency assessments.

Most importantly, if you look closer at the details that fill in those strategies (specifically pages 23-25) you will see that every proposal starts with “HHS may.”  In the 44 pages of the Blueprint, the key word is MAY. Nothing in the Blueprint is straight directive. It is a suggestion for the agency. What HHS actually does remains to be seen. And this remains an uncertainty for stakeholders until we see what is done.

Additionally, in the Blueprint we see that the Administration is interested in comments regarding steps that can be taken to improve price transparency in Medicare, Medicaid, and commercial plans, ending foreign government freeloading, examining the 340B program, changing/improving REMS, fiduciary duties for PBMs, and restructuring of rebates. They will be issuing an RFI for public comment. Although this is a long list, this is a long way from actual action.

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About this Author

Susan Berson, Public Health Service Attorney, Mintz Levin Law Firm

Susan is Managing Member of the firm’s DC office, and she also serves on the firm’s Policy Committee. Her practice focuses on advising private and public health care service providers, including managed care organizations, pharmaceutical services providers such as PBMs, behavioral health companies, specialty care companies, and integrated delivery systems, often in the context of strategic affiliations and complex service agreements.

Susan has advised some of the nation’s largest government health programs and has negotiated some of the nation’s...

Theresa Carnagie, Health Law Attorney, MIntz Levin Law Firm

Theresa’s practice involves a variety of transactional, regulatory, and fraud and abuse matters.

Her transactional experience focuses on advising health care clients on joint ventures, mergers and acquisitions, service agreements, and corporate stock and asset acquisitions. She has served as corporate and regulatory counsel to retail pharmacy chains, pharmacy benefit managers, and health care providers in acquisitions, which included due diligence, licensing, change of ownership, Medicare and Medicaid state certification, and contracting. She has deep experience preparing and negotiating pharmacy network agreements, pharmaceutical purchase and distribution agreements, and rebate agreements.

She also advises health care clients on a variety of regulatory issues, such as Medicare compliance and reimbursement, federal and state anti-kickback and self-referral laws, and state regulatory issues, including corporate practice of medicine and fee-splitting prohibitions.

Theresa assists in the defense of clients subject to federal investigation for violation of the federal anti-kickback law and provides compliance advice to clients in structuring proposed transactions and business arrangements to comply with the anti-kickback and Stark fraud and abuse laws as well as other applicable state and federal regulatory requirements. Theresa has counseled a range of health care providers, including pharmacies, renal dialysis providers, physicians and physician groups, mental health providers, laboratories, hospital systems, practice management companies, and life sciences companies.

Tara Swenson-Dwyer, Health Care, Attorney, Mintz Levin, Law Firm

Tara focuses on advising private and public health care services entities, including managed care organizations, pharmaceutical services providers such as PBMs, and integrated delivery systems, on mergers and acquisitions, joint ventures, and complex service arrangements. She works closely with Medicare Advantage Organizations (MAOs) and Medicare Part D Plan Sponsors, including Employer Group Waiver Plans (EGWPs), and first tier and downstream entities to address regulatory and compliance matters that arise as a result of participating in Medicare Parts C and D. Tara has experience...