President Donald Trump presented his long-awaited "blueprint" to combat rising drug prices May 11, and despite previous remarks stating the pharmaceutical industry is "getting away with murder," Trump largely spares drugmakers from sweeping reform, according to The New York Times.
President Trump's plan, dubbed "American Patients First," seeks to increase competition, improve negotiation and create incentives to lower list prices of prescription drugs and out-of-pocket costs for consumers.
Here are six key proposals outlined in President Trump's plan, as outlined by The New York Times.
1. Persuade other countries to pay more for prescription drugs. Americans often spend substantially more for the same prescription drug than people in other countries. In fact, the U.S. spends more on prescription drugs than any high-income nation. President Trump's proposal involves pressuring other countries to raise their prices and address this disparity in price. It is unclear whether other countries would be willing to raise prices or if pharmaceutical companies would then lower the prices in the U.S.
2. Try to lower drug prices for Medicare. President Trump's proposal calls for experimenting with "value-based purchasing," which is essentially a money-back guarantee if the drug doesn't work as planned. Further, the Trump administration said it should make generic medicines free for some low-income Medicare beneficiaries. In addition, the White House is calling on agencies to explore whether Medicare drug plans should be allowed to pay different amounts for the same drug.
3. Include more regulations on drug ads. The Trump administration wants pharmaceutical companies to disclose the drug's list price in advertisements to create transparency.
4. Ban "gag clauses" for pharmacists. A gag clause, which is often outlined in contracts between pharmacies and pharmacy benefit managers, prohibits pharmacists from telling consumers that they would pay less out of pocket for prescription drugs than they would going through their insurance. The administration's blueprint suggests banning these clauses. "This is a total rip-off, and we are ending it," President Trump said in his speech, according to The New York Times.
5. Rein in patent "games." Patent protection for new drugs is vital to ensure pharmaceutical companies can recoup the money spent researching and developing drugs, according to industry leaders. However, the industry has come under fire recently for holding on to patents too long, causing a decrease in competition and soaring list prices. President Trump's blueprint says reining in this game-playing will foster competition. “Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies," he said during his blueprint unveiling.
6. Fix the current rebate system. The existing rebate system, where pharmaceutical companies issue discounts off a drug's list price to insurers and employers, has come under fire for its secrecy. In fact, the amount of each rebate is generally considered a trade secret and PBMs often pocket part of this rebate. Trump administration suggests upending the current system by revisiting anti-kickback statutes to determine whether these rebates should be classified as illegal kickbacks. "We're very much eliminating the middlemen," President Trump said, according to CNBC. "The middlemen became very, very rich. Whoever those middlemen were, and a lot of people never even figured it out, they're rich. They won't be so rich anymore."
Many of these proposals would need congressional action to move forward.