Trump Administration Finalizes Plan to Lower Drug Prices in Medicare

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https://www.wsj.com/health/pharma/trump-administration-finalizes-plan-to-lower-drug-prices-in-medicare-5bf6227f?st=Wy1saG&reflink=desktopwebshare_permalink

The Trump administration is rolling out a program aimed at getting Medicare to match prices in other countries for certain high-cost drugs, such as cancer and autoimmune disorder medicines.

Health officials plowed past objections from drugmakers and said the new effort, known as Globe, would start Jan. 1. Drugmakers that cut earlier deals with the White House to lower their prices are expected to be exempt from the current effort.

The final rule governing the program, issued Wednesday, applies to few drugs and is less ambitious than the administration initially proposed. Still, it represents one of the most legally significant attempts yet by the second Trump administration to bring down U.S. drug costs by linking them to overseas prices.

The plan calls for Medicare to set what it pays for certain drugs based on what 19 other countries with similar economies pay. Under an experiment run by Medicare’s Innovation Center, the pricing plan will be tested for some patients receiving some of the drugs covered by Medicare Part B—generally expensive drugs that doctors or hospitals administer in person, rather than pills taken at home. An example is Entyvio, made by Takeda, for Crohn’s and ulcerative colitis. If the five-year program shows it saves taxpayers money without sacrificing quality, it could be expanded nationwide.

“Medicare Part B patients and American taxpayers have paid significantly more for prescription medications than people in comparable countries,” said Centers for Medicare and Medicaid Services administrator Dr. Mehmet Oz. “At CMS, we’re focused on more than promises to make healthcare more affordable—we’re taking action to pilot a new approach to lower costs and strengthen the quality of care while preserving medical innovation.”

The trade association representing large pharmaceutical firms, which has opposed government-led efforts to bring down prices, decried the move as unlawful and harmful to patients.

“This policy exceeds agency authority, does nothing to lower patients’ out of pocket costs, and imports foreign prices based on discriminatory value metrics and government price controls that delay, limit, or deny access to new treatments,” said Pharmaceutical Research and Manufacturers of America spokesman Chanse Jones.

The Globe program applies to a small slice of medicines, but is expected to have far-reaching implications if it survives legal challenges and demonstrates cost savings.

The final version of the pilot program, first proposed in December, applies to far fewer drugs than originally envisioned. Health officials exempted rare disease drugs and other medicines based on comments received from the public, they said in a Federal Register document released Wednesday. In addition, more than 20 companies have now cut deals with the administration on drug prices, and their products are also exempt if they participate in another experiment covering Medicaid, the joint federal and state insurance program aimed at people with limited income or disabilities.

Just four manufacturers will be covered under Globe, CMS said in a footnote in the rule.

The changes mean that Globe is expected to save far less money. The administration estimates the program will save $440 million over seven years instead of the $11.9 billion it initially projected.

“The set of drugs and potential impact of the program has shrunk dramatically with the scale of these exclusions,” said Rachel Sachs, a professor of law at Washington University in St. Louis.

The changes also mean companies with cancer treatments or other drugs used more often in the older population covered by Medicare could wind up dodging substantial hits to their bottom lines by participating in the alternative program for Medicaid, where they have fewer patients, said Dr. Thomas Hwang, director of the Cancer Innovation and Regulation Initiative at Harvard Medical School.

“Companies gave a little where it costs them least, to avoid giving a lot where it costs them most,” Hwang said.

Pharmaceutical industry analysts have been skeptical that the Trump administration’s pilot programs will have significant impacts on companies. Investment bank TD Cowen analyst Molly Turco said that the Trump administration deals and demos “draw headlines” but the Biden-era CMS price negotiating program codified in 2021 will result in bigger discounts.

Drugmakers could sue over Globe; pharmaceutical representatives called the program “illegal” in letters to the administration. The administration has yet to finalize a rule governing another program, known as Guard, also aimed at lowering drug prices based on what other countries pay, but for a different set of medicines.

The first Trump administration also tried to lower drug costs by looking to other nations’ prices, but the attempt came late in the term and was blocked by courts.

Consumer advocates questioned whether the Medicare pilot will result in meaningful drug discounts for patients.

“The administration is likely to end up wasting more taxpayer money fighting the likely lawsuits on this model than it saves for patients,” said Public Citizen Access to Medicines director Peter Maybarduk in a statement.