Drugmakers Dodge Another Bullet in Trump's Drug Pricing Report

  • Report blames high prices on foreign governments, regulation
  • Calls for ‘preserving incentives’ for private innovation
Trump vs. Big Pharma: Can He Bring Drug Prices Down?

A White House report on drug pricing is another sign pharmaceutical companies can rest easy: President Donald Trump won’t act on past threats to take drastic measures to lower prices.

The 30-page report circulated by the president’s Council of Economic Advisers blames high drug prices on foreign governments, as well as U.S. regulations, hospitals, middlemen known as pharmacy-benefit managers and high costs of innovation -- basically everyone but the drugmakers themselves. Bottom line: Big drugmakers are dodging another bullet in the finger-pointing game.

A large focus of the report, called “Reforming Biopharmaceutical Pricing at Home and Abroad,” is on U.S. policies that the council says need to change because they stymie innovation or lead drugmakers to price treatments too high.

“Preserving incentives for biopharmaceutical innovation can be achieved while still promoting lower prices for Americans,” according to the report’s executive summary.

It’s unclear how, but the council wants the U.S. to implement measures that would push other countries where governments set drug prices to “appropriately reward innovation, rather than disproportionately putting that burden on American patients and taxpayers.” 

The report also calls for limiting a drug-discount program for hospitals that care for a disproportionate share of poor people and breaking up the pharmacy-benefit manager industry, which drugmakers have complained is dominated by a few large companies they say don’t appropriately pass on negotiated savings to consumers.

These recommendations, largely echoed in Trump’s 2019 budget proposal to be released Monday, coupled with calls to make drug development more efficient, are reason for pharmaceutical investors to celebrate.

Some policies in the report, as well as those Health and Human Services Secretary Alex Azar said would be in Trump’s budget request, may take a bite out of drugmaker profits, such as a proposal to change how some expensive drugs are paid for by Medicare by making them subject to pharmacy benefit manager negotiations. But those pale in comparison to Trump’s previous threats to have the government negotiate prices directly -- one of the industry’s biggest fears.

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