President Trump announced on Thursday that he's introducing an effort to make some prescription drug prices fairer and more comparable to what they are in other countries. Foreign countries and drug companies, the president declared in a speech at the Department of Health and Human Services Thursday, have been taking advantage of Americans consumers for too long. The regulation the administration is proposing would set up what's called an "international pricing index" that would be used as a reference point for helping set up prices for drugs paid for through Medicare Part B. "Today, we are here to announce another bold and historic action to bring down the price of prescription drugs," the president said. "With the action I am unveiling today, the United States will finally begin to confront one of the most unfair practices — almost unimaginable that it hasn't been taken care of long before this — that drives up the cost of medicine in the United States." The president, as he often does in other policy areas, focused on how "unfair" the current system is to patients. "At long last the drug companies and foreign countries will be held accountable for how they rigged the system against American consumers," Mr. Trump said. "This is a revolutionary change. Nobody's had the courage to do it or they just didn't want to do it. And this is a change for the people. This is not a change for industry or for companies or for pharma. This is a change for the people. It will be substantially a reduction in drug prices for our people and our senior citizens. Tremendous, tremendous difference." The commander-in-chief also said his administration will soon be announcing some things that he claimed will have a tremendous impact on health care costs, although he didn't specify what he meant by that. Health care is high among voters' election-year concerns — particularly for Democrats. Mr. Trump has promised sweeping action to attack drug prices, both as president and when he campaigned for the White House. In advance of the speech, HHS released a report that found U.S. prices for the top drugs administered in doctor's offices are nearly twice as high as in foreign countries. The list includes many cancer drugs. Medicare pays directly for them under its "Part B" coverage for outpatient care. HHS Secretary Alex Azar on Twitter said "the current international pricing system has put America in last place." In most other economically advanced countries, governments take a direct role in setting drug prices. That's something the United States traditionally has avoided, and Republicans in particular are loath to do. Azar said Medicare spent about $8 billion more for drugs in the study than if the prices paid by the program were scaled to international prices. Any push to dramatically lower prices here would meet resistance not only from drugmakers but from doctors, two of the most powerful lobbies. Mr. Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder," a comment that sent pharmaceutical stocks tumbling. But it's largely been business as usual for drugmakers even as the president has predicted "massive" voluntary price cuts. A recent Associated Press analysis of prices for brand-name drugs found far more increases than cuts in the first seven months of this year. The analysis found 96 price hikes for every price cut. The number of increases slowed somewhat and they were not quite as steep as in past years, the AP found. As a candidate, Mr. Trump called for using Medicare's clout to negotiate prices. As president, he's had to shelve that idea since it's a nonstarter for congressional Republicans and even Azar. Instead the White House has opted for a complex strategy that incorporates some 50 proposals to try to change the workings of a market that is legendary for being opaque. Some of those ideas have advanced. Over industry objections, the administration is moving to require drugmakers to disclose prices in their consumer advertising. And Mr. Trump signed into law a bill that outlaws so-called "gag clauses" preventing pharmacists from telling customers when they could save money by paying cash instead of using their insurance. The Food and Drug Administration is approving generics at a record pace. In another warning shot at the industry, the FDA is studying ways to allow lower-cost drug imports from abroad in the event of U.S. price spikes. But Medicare and Medicaid changes are more difficult to carry out, since congressional approval would be needed for any major policy shifts. The White House also seems committed to squeezing middlemen called "pharmacy benefit managers," companies that run prescription coverage for insurers and employers. The benefit managers say the rebates they win from drugmakers get returned to consumers in the form of lower insurance premiums. But administration officials say rebates add hidden costs to the system and in effect encourage drug companies to price higher to begin with.<doc-sep>The report compares the price paid by Medicare for 27 prescription drugs with the average price paid for the same drugs by countries with similar economic conditions. It concludes the higher U.S. prices means Medicare pays nearly twice as much as the program would pay for the same or similar drugs in other countries. During his speech, Trump cited an example of a “common” cancer drug that he said is seven times as expensive for Americans as for people living outside the United States, though he did not name the drug specifically.<doc-sep>President Donald Trump speaks about prescription drug prices with Health and Human Services Secretary Alex Azar in the Rose Garden on May 11. Thursday's event is another move to address his campaign promise on lowering those prices. | Carolyn Kaster/AP Photo Health Care Trump proposes sweeping changes to Medicare drug prices President Donald Trump on Thursday unveiled a plan to overhaul how Medicare pays for certain drugs, attacking “foreign freeloaders” that he says have driven up costs in the U.S. The bold move addresses a Trump campaign pledge to lower drug prices, just days before the tightly contested midterm elections in which health care is playing a pivotal role. Trump outlined the details in a speech at HHS Thursday afternoon, his first address at the health department. The proposal, first reported by POLITICO, still needs to be refined and put through a federal rule-making process. The proposal would bypass Congress by using a pilot program to test three ways to lower the costs of drugs — including negotiating for some drugs directly administered by doctors to keep them in line with the far lower prices paid in many other countries, where governments often take an active role in setting prices. The proposal applies only to drugs administered in doctors’ offices and outpatient hospital departments — medicines like cancer treatments and injectable treatments for rheumatoid arthritis or eye conditions. It won’t affect most prescriptions purchased by patients at pharmacies. "For decades other countries have rigged the system so that American patients are charged much more — and in some cases much, much more — for the exact same drug," Trump said in a brief speech at HHS. "In other words Americans pay more so other countries can play less." HHS Secretary Alex Azar on Thursday morning touted a new department report on high U.S. drug prices that found Medicare often pays nearly twice as much as countries like France and Japan to use the same drugs. The Trump administration says that Medicare could save more than $17 billion over five years, with the cost of some drugs dropping by as much as 30 percent. Prescription Pulse A weekly briefing on pharmaceutical policy news — in your inbox. Email Sign Up By signing up you agree to receive email newsletters or updates from POLITICO and you agree to our privacy policy and terms of service. You can unsubscribe at any time and you can contact us here. This sign-up form is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. The administration is bracing for blowback, said one official, noting that hospitals and doctors — and of course the drug companies — all have reason to be unhappy about a plan that will cost much of the health sector money. The drug industry and its allies have lots of lobbying clout; a less ambitious effort by the Obama administration to address Medicare Part B prices fizzled in late 2016. “Nobody’s going to like this,” said the official. “It antagonizes too many people.” PhRMA, the main trade group representing drugmakers, before Trump's speech expressed "serious concerns" about proposals that could limit patient access to drugs or discourage innovation. The Biotechnology Innovation Organization slammed Trump for embracing price controls used in other countries, predicting the proposal will "severely chill investment in new cures and therapies for America’s seniors." Three drug companies — Roche, Amgen and Regeneron — would be particularly hard hit by the move, Wall Street investment analyst Ronny Gal of Bernstein wrote in a note to clients. He analyzed the share of Medicare Part B revenue for the top 20 drugs purchased by the program in 2016. Johnson and Johnson, Bristol-Myers Squibb and Eli Lilly would also be affected, according to the analysis. Both “Roche and Regeneron are showing the strain,” in the stock market’s reaction Thursday, Gal said. Despite the threat, Gal said the proposal “should be taken in stride,” due to the drug industry‘s “substantial clout” and the Trump administration’s history of throwing out a “sharp first position and negotiating some of it away.“ But he cautioned the private sector is taking a page from the White House and starting to look at similar cost control ideas. Trump’s proposal could appeal to patients, who stand to benefit from lower prices, however, as well as Democrats, who have chastised the administration for not using its regulatory power to rein in drug prices, which polls show are a concern of both Republicans and Democrats. Trump predicted Democrats would back the plan. "We think they will actually come along with us when they see what we’re doing," Trump said. Health care has emerged as a hot issue in the midterms, with Democrats making gains by pledging to save Obamacare's protections for people with pre-existing conditions. Those protections would have been undermined in GOP repeal bills and are now threatened by a White House-backed lawsuit brought by conservative states. Trump’s pivot to drug prices could help Republican candidates needing a winning message on health. Hours before Trump's speech, the pro-Obamacare group Protect Our Care called it a "desperate attempt to mask" the GOP's record on pre-existing conditions. Senate Minority Leader Chuck Schumer quickly dismissed the plan. "It's hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election when they have repeatedly advocated for and implemented policies that strip away protections for people with pre-existing conditions and lead to increased health care costs for millions of Americans," Schumer said in a statement. The Trump administration pricing proposal has several pieces, all of which dramatically shake up the industry that right now has vast control over setting Medicare drug prices. Medicare, which covers more than 50 million elderly and disabled Americans, is one of the world’s biggest purchasers of health-care services. Under the planned “international pricing index,” U.S. drug prices would be benchmarked against prices in countries with similarly developed economies. U.S. prices would slowly be lowered to international levels over five years. The plan draws on HHS analysis comparing the U.S. against 16 other nations — Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden and the United Kingdom — where target drug prices are collectively 44 percent lower. The Trump administration also wants to experiment with letting private sector vendors negotiate with drugmakers. That strategy is modeled on how health insurers negotiate drug prices in Medicare’s Part D program, which covers outpatient drugs for older Americans. Medicare would test this approach in certain geographic areas, where participation would be mandatory for physicians and hospitals. Not all drugs would be included in this test. CMS would focus on drugs made by just one company (which tend to be expensive) and biologic medicines, which make up a large share of Medicare Part B spending. The federal government and Medicare beneficiaries spent about $29 billion on Part B drugs in 2016. Under the third branch of the strategy, officials would try changing incentives for doctors to prescribe drugs. Currently, doctors often have incentives to prescribe more expensive drugs, because they get a fee based on the price. Changing that to a flat fee — instead of a percentage — could help nudge doctors to use less expensive medications. Beyond Trump’s speech, administration officials are planning a communications blitz, which began with the HHS report on Thursday morning that lays out the high prices with Medicare’s Part B program. Azar is scheduled to give his own speech at the Brookings Institution on Friday. CMS also will begin inviting comments and announce that it may propose the rule in the spring 2019 with an eye toward starting the program in spring 2020. When President Barack Obama sought to test new ways to pay for physician-administered drugs, the blowback came from fellow Democrats, as well as from Republicans, doctors, hospitals and patient groups. His proposal never got off the ground. But Trump is touting this plan as part of his “America-first” agenda, blaming other nations for paying too little for drugs and relying on Americans to absorb the higher prices that fund new pharmaceutical innovation.<doc-sep>
President Donald Trump outlined a plan Thursday he said would allow Medicare to lower drug prices for its Part B coverage and end this "rigged system" that allows other countries to pay less than the U.S. for the same drugs. Under the administration's proposal, the Department of Health and Human Services would permit Medicare to create a new payment model that would bring drug prices in line with what other nations pay. HHS estimates $17 billion in program savings over five years, it said in a press release. The agency is trying to issue a formal rule early next year with the new payment model taking effect in 2020, HHS said. "For decades, other countries have rigged the system so that American patients are charged much more ... for the exact same drug," Trump said in his speech at HHS headquarters in Washington. "Americans pay more so that other countries can pay less," Trump said. "The government pays whatever price the drug companies ask ... not any more." The SPDR S&P Pharmaceuticals index, which tracks drug stocks, was more than 2 percent higher early afternoon Thursday. In May, Trump said it was time to end the "global freeloading once and for all," referring to how some countries set price controls and therefore pay less for drugs than Americans, while U.S. companies invest in research and drug development. Health and Human Services Secretary Alex Azar released a report earlier in the day that said the U.S. pays 1.8 times more, and sometimes four times as much, for prescriptions covered by Medicare Part B than other nations. "The United States will finally be able to confront one of the most unfair practices ... that drives up the cost of medicine," Trump said. "For decades other countries have rigged the system so that American patients are charged much more, and in some cases much, much more for the exact same drug," he said. Tweet 1 Medicare reimburses the list price of the drug plus 6 percent, so capping price increases could help lower the program's costs. Total Medicare drug spending reached $162 billion in 2015, according to data from the Centers for Medicare and Medicaid Services. "Because @POTUS wants to end global freeloading, we compared prices for the most costly physician-administered drugs that are covered and paid for by Medicare Part B," Azar tweeted. The "prices for Part B drugs in America exceed the prices paid in countries with similar economic conditions." — CNBC's Angelica LaVito and Meg Tirrell contributed to this report. This is a developing story. Please check back for updates. WATCH: This is what Medicare does and doesn't cover