More Details Emerge on Trump’s Multi-Pronged Plan to Cut Drug Prices


As drug prices continue to spike upwards at an ever-increasing rate, President Trump, on May 11, announced a slew of 50 proposals to lower drug prices. This blueprint, dubbed American Patients First, while low on details, promises to be just the opening salvo in an ongoing initiative to lower drug costs for consumers. For a mainstream reporting on Trump’s list of ideas to bring down drug prices see this CBS News report:

For a more nuanced and in-depth analysis of Trump’s proposals that have a good shot at bringing down drug prices, along with those that less likely to work, see the following Forbes article:

One of the more promising ideas to lower drug prices would require drug companies to disclose the retail cost of their medicines in any TV advertising. The idea is that if a drug is exorbitantly priced, it would suffer from a strong consumer public relations backlash.

Perhaps the idea with the best chance of significantly reducing drug prices is the call to minimize—perhaps even eliminate—the role of middlemen in the convoluted drug pricing game. These middlemen, known as Pharmacy Benefit Managers, or PBMs, stand between drug manufacturers and insurance companies and supposedly negotiate on behalf of insurance companies to purchase the drugs from the drug-manufacturers at the lowest price possible.

However, PBM’s have become extremely controversial. In a June 12 appearance before a U.S. Senate committee to discuss high drug prices and to give more details of Trump’s initial May 11th announcement, U.S. Department of Health and Human Services (HHS) Secretary Alex Azer asserted that


PBMs have a vested interest in keeping drug prices high and are actually discouraging drug manufacturers from cutting their retail prices.

Here are excerpts of some parts of Azer’s testimony: “Right now, everybody in the system makes their money off a percentage of list prices—both drug companies and pharmacy benefit managers, as well as the distributors [i.e., insurance companies]. Everybody wins when list prices rise—except for the patient.” Being the middleman gives the PBMs a perverse incentive to keep list prices artificially high which creates more room for rebates, most of which likely get passed on to insurance companies, but a large chuck of which the PBM gets to pocket as extra profit.

What makes Azer’s indictment of PBMs especially compelling, is the fact that he is a former drug company executive, having been in the top echelons with Eli Lilly. You can listen to Azer’s testimony here: While the entire testimony is quite long, the meat of it is contained in the first 15 minutes.

Some of Trump’s initiatives can be done administratively, others will require Congressional approval. Let’s hope that everyone works together to bring sky-high drug prices down to a level that everyday people can afford.


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