American Patients First: The Trump Administration’s Blueprint for Lowering Healthcare Costs
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This post was authored by Dan Colacino, Vice President of Underwriting and Compliance at Rose and Kiernan, Inc.
It took 44 pages and a lot of rhetoric, but the Trump administration has finally released American Patients First, a somewhat watered-down version of their plan to control prescription drug prices. I use “watered-down” in relative terms since the plan is a start but falls short of the aggressive measures he promised during his campaign.
There is no mention of direct negotiation between Medicare and pharmaceutical manufacturers. In fact, in his statement, Alex Azar, U.S. secretary of health and human services, gave a plug to the health insurance industry which, according to the president, is one of the culprits who are “getting away with murder.” Secretary Azar says that he wants to move some drugs from Part B to Part D of Medicare, including cancer treatments usually administered at the doctor’s office or in hospital outpatient departments. Medicare Part D contracts with private health insurance companies which manage prescription drug benefits and negotiations with pharmaceutical manufacturers. This move, Azar claims, will save “billions of dollars” because “there is currently no negotiation at all” on Medicare Part B drug prices.
Basically, the private insurance industry does a much better job at negotiating and administering health plans than the federal government does, a fact borne out by looking at Medicaid and Medicare in New York state. Most Medicaid is not handled by the state, but by private carriers through the Managed Care program. Similarly, with Medicare, almost half are covered not by traditional Medicare, but by Medicare Advantage plans.
Not included were any direct attacks on the source of the high costs – the pharmaceutical industry, but Trump did manage to blame foreign governments for causing high costs because they “extort unreasonably low prices” from U.S. drug makers. This was a departure from his earlier, much harsher criticisms of pharmaceutical companies. Overall, many feel that the Trump’s proposed blueprint has not scared the pharmaceutical industry much, if at all.
Don’t expect to see any immediate effect on the cost of your prescription drug plan since there is really nothing here that would provide any short-term relief. The good news, Secretary Azar, a former Eli Lilly executive, now appears to have switched sides and seems to be ready to take on the pharmaceutical industry. In some of the comments during his defense of the program, he vowed to use a tactic espoused by former President Barack Obama “I’ve got a pen and I’ve got a phone — and I can use that pen to sign executive orders and take executive actions and administrative actions that move the ball forward,” Mr. Obama said. The hint was that Secretary Azar will use his position to authorize demonstration projects, waivers and experiments to bring prices down. Let’s hope this fervor continues.
