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Trump's budget plan offers little more than a Band-Aid for soaring drug prices

Trump's budget plan offers little more than a Band-Aid for soaring drug prices
President Trump’s budget plan sidesteps the most obvious and effective measure for tackling sky-high drug prices: allowing Medicare to negotiate directly with drug makers. (AFP/Getty Images)

President Trump repeatedly has declared his unwavering commitment to improving healthcare and lowering drug prices.

On Monday, he unveiled a $4.4-trillion budget plan that pointedly avoids taking meaningful steps to accomplish those goals. Instead, it offers tepid half-measures that are little more than Band-Aids for problems requiring major surgery.

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Trump's plan calls for capping how much seniors pay annually for prescription drugs, making generic meds free for low-income seniors and allowing Medicare beneficiaries to share in any rebates offered by drug companies to the middlemen that negotiate costs on behalf of insurers and pharmacies.

Most of these ideas would require acts of Congress, so that kind of ends the conversation right there. In the 2016 election cycle, the pharmaceutical industry contributed nearly $63 million to candidates on both sides of the aisle, according to the Center for Responsive Politics.

Trump's plan also sidesteps the most obvious and effective measure for tackling sky-high drug prices: allowing Medicare to negotiate directly with drugmakers.

Republican politicians have consistently shot down any such move, believing, correctly, this would significantly impinge on the drug industry's ability to rake in profits by fleecing the sick.

Nor does the plan allow for "reimportation" of drugs manufactured in the United States and then sold for far less abroad than to Americans. Republicans also have resisted Democratic proposals to allow Americans to legally buy meds from abroad.

But Trump's plan does seek $554 billion in cuts to Medicare spending over 10 years, plus about $250 billion in cuts to Medicaid spending.

So his healthcare policy seems to be: Don't get sick.

"This is not an ambitious plan for lowering drug prices," said Geoffrey Joyce, a pharmaceutical economist at USC.

"The White House doesn't want to take on the drug industry," he told me. "They just want to be able to say that they're doing something."

Mick Mulvaney, the White House budget director, told reporters last week that lowering drug prices is "a top, top priority for the president."

That would be the same Mick Mulvaney who, while also serving as interim director of the Consumer Financial Protection Bureau, has been systematically eliminating consumer protections.

He was joined at the briefing by Trump's new Health and Human Services secretary, Alex Azar, a former drug industry executive. He said Trump wants to "increase the ability of the government to get a good deal."

If so, he'd unleash Medicare's market power by allowing the program to haggle prices on behalf of its 55 million beneficiaries. But Azar said during his confirmation hearing that letting Medicare flex its muscles would harm seniors by limiting their access to certain medications.

"I don't believe we want to go there in restricting patient access," he said.

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Yes, let's go there, says AARP, the nation's largest advocacy group for seniors. "It's time to let Medicare negotiate lower drug prices and reduce barriers to global price competition by allowing for the safe importation of lower-priced drugs," the organization says.

Trump's budget plan would expand catastrophic drug coverage under Medicare Part D so that seniors would pay less out of pocket in the event of serious illness. But it's unclear where the money would come from for this improved benefit, especially in light of extensive cuts to the program.

Equally questionable is how the federal government would force so-called pharmacy benefit managers to pass along a greater share of rebates to consumers.

"The PBMs would fight that tooth and nail," USC's Joyce said.

And spending caps for some branded drugs covered by Medicare? Under this business-friendly Congress? Who are we kidding?

Ellen Albritton, senior policy analyst with the healthcare advocacy group Families USA, told me that if Trump and lawmakers were serious about reducing drug prices, they'd require more transparency from pharmaceutical companies.

Such openness would go a long way in revealing the huge markups imposed by drugmakers, often with no economic justification other than a willingness to gouge patients with whatever price the market will bear.

"None of these latest proposals get at the root of the problem," Albritton said. "They just paper over things."

A 30-page report last week from Trump's Council of Economic Advisors blamed pretty much everyone except drug companies for crazy-high drug prices.

Bizarrely, it said other nations are partly to blame for U.S. drug pricing because those countries set their own prices too darn low, forcing drug companies to rely on Americans for a disproportionately large share of their inflated profits.

The report also said drug prices "are sometimes artificially high due to government regulations," which undoubtedly was music to the pharmaceutical industry's ears.

This is the same industry that spent a reported $7 million last year on a PR campaign titled "Go Boldly," aimed at convincing people that drug companies care mostly about helping society.

Patients know better, which is why they can only marvel at the greed and arrogance of an industry that routinely doubles or triples the prices of branded drugs even as the number of patients using that drug increases.

In other businesses, economies of scale would lead to prices going down in such situations. Laptops and TVs, for example.

A poll last year by the Kaiser Family Foundation showed that 92% of Americans favor allowing Medicare to negotiate drug prices. Seventy-eight percent want caps on drugs for costly illnesses such as hepatitis and cancer. And 86% say drug companies should have to provide information to the public explaining how a drug price was set.

It's pretty simple. Other developed countries regulate drug prices, and take advantage of the government's purchasing power, because they understand that you don't treat the sick as profit centers.

For all his bluster about drug prices being too high, Trump has done little but posture and make empty gestures.

It's well-known what has to be done to bring drug prices down.

But this president, and this Congress, will not bite the hand that feeds.

David Lazarus' column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to david.lazarus@latimes.com.

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