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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 Benson Health Attorney Mintz Law Firm
Member / Managing Member, DC Office; Chair, Health Law, Communications, Antitrust & ML Strategies Division

Susan’s clients depend on her in-depth industry knowledge and strategic insights. Her in-house experience informs her pragmatic, business-savvy counsel to health care industry clients. She regularly advises pharmaceutical services providers, managed care organizations, post-acute and long term care providers, and those who invest in the industry on the risks and potential benefits of strategic affiliations, complex service agreements, and due diligence in high profile transactions. She also provides counsel on government programs such as Medicare and Medicaid, and...

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Theresa Carnagie, Health Law Attorney, MIntz Levin Law Firm
Member

Theresa counsels health care clients on a variety of transactional, regulatory, and fraud and abuse matters.

Theresa focuses much of her practice on counseling health plans, pharmacy benefit managers, pharmacies, device manufacturers, and distributors on regulatory and compliance matters. Her practice extends to counseling on drug pricing and reimbursement issues, Medicare Advantage and Medicare Part D compliance, and the regulatory requirements under the Affordable Care Act and state health insurance exchanges. Theresa has extensive experience drafting, negotiating, and structuring PBM agreements, retail, mail and specialty pharmacy agreements, GPO agreements, and pharmaceutical purchase, distribution, and rebate agreements. She also regularly counsels these clients on compliance with federal and state fraud and abuse laws, the PhRMA and AdvaMed Codes, state disclosure and gift ban laws, and state licensure laws.

Theresa also specializes in representing clients in connection with mergers and acquisitions, joint ventures, strategic affiliations, complex service agreements, provider contracts, network development programs, and general contracting. Theresa advises clients on the structuring and legal, practical, and fraud and abuse implications of these business arrangements and transactions. She has served as health regulatory counsel on managed care, PBM, pharmacy, laboratory, behavioral health, anesthesiology, DME, and practice management company transactions. Theresa also has deep experience assisting private equity firms in connection with their investment in the health care industry and the day-to-day regulatory compliance of their portfolio companies.

Other aspects of Theresa’s practice include day-to-day counseling on matters related to the anti-kickback statute, the Stark law, and state statutes prohibiting kickbacks and self-referrals. Theresa regularly advises client on the structuring of business arrangements to comply with state regulatory restrictions such as corporate practice of medicine and fee-splitting prohibitions. Theresa is also an Editor of and a frequent contributor to Mintz's Health Law blog, Health Law & Policy Matters.

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

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...

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