The White House planted a few new flags on drug pricing—and a lot of familiar ones—when it rolled out its 2020 budget proposal Monday afternoon.
The Trump proposal is just a jumping-off point for budget negotiations with—and within—Congress. But like the administration’s drug-pricing blueprint released last year, it outlines presidential priorities for putting the squeeze on drug prices, namely increasing competition, encouraging “better negotiation” and lowering out-of-pocket costs for patients.
And like the blueprint, the budget calls for Medicare and Medicaid changes aimed at drug spending, plus proposals to ramp up biosimilar competition, a crackdown on regulatory “gaming” and more, according to a fact sheet (PDF) released Monday.
For example, in Medicare, the administration aims to “modernize” Part D drug coverage by fixing “misaligned incentives” that drive spending higher. Under one proposal designed to boost use of lower-cost copycats, it would cover generics and biosimilars at no charge for all low-income beneficiaries, rather than requiring some cost-sharing pegged to income levels.
Another proposal would cap out-of-pocket spending for patients, forcing insurers to pick up a bigger share of the tab and, the administration hopes, prompt smarter spending overall.
Those are just a couple of the Part D plans. In Medicare Part B—drugs administered by doctors and hospitals—the administration calls for Medicare to exercise more negotiating power, provide more transparency on drug costs and change the way some drugs are paid for. The administration, for example, would like to give the HHS secretary the power to move some Part B drugs into Part D where pricing competition could lower costs.
The budget’s Medicaid proposals include ending the rebate cap and giving HHS more power to crack down on “misclassified” drugs. Industry watchers may remember Mylan’s $465 million settlement for misclassifying EpiPen as a generic rather than a branded product, which allowed the company to pay smaller rebates than it should have.
Also proposed is a test program where five state Medicaid systems implement a closed formulary and negotiate prices directly with drugmakers.
Apart from Medicare and Medicaid, the budget focuses on boosting biosim uptake and allowing the FDA to continue its crackdown on regulatory “gaming” that stifles competition.
Trump’s 2020 budget comes almost a year after the administration rolled out its “blueprint” to lower drug costs. Generally, the administration wants to boost competition and transparency in drug markets while lowering patient out of pocket costs.
While the industry seems open to many of the administration’s proposals—including eliminating rebates—one proposal is getting a high level of industry pushback. The Trump administration’s international price index would force lower Medicare Part B prices over 5 years by tying U.S. prices to a group of 16 other developed nations. Drugmakers have launched a campaign against the proposal, saying it brings foreign price controls to the U.S.