President Trump has the power to sink pharmaceutical stocks with a single jab about high drug prices.
But in a much-anticipated speech on the topic on Friday, Mr. Trump largely avoided the issues the industry fears the most, such as allowing Medicare to directly negotiate drug prices, or allowing Americans to import drugs. Investors noticed: Stocks of major drug companies rose after his speech, as did those of pharmacy benefit managers, or the “middlemen” that Mr. Trump said were getting “very, very rich.”
As the health care world parsed the president’s newly released “blueprint” to lower drug prices, the overarching insight seemed to be this: The drug industry’s formidable lobbyists had won some key victories, even if they did not escape entirely unscathed. Many proposals were light on detail and will need action by Congress to become real.
Yet Mr. Trump won some praise for having taken a stab at tackling such a complex and vitally important issue to many Americans.
Here is a rundown of the key proposals unveiled on Friday.
Lower drug prices for older people
On the campaign trail, Mr. Trump embraced allowing Medicare to negotiate the price of the drugs it buys for older people, an issue traditionally supported by Democrats but long opposed by Republicans — and the powerful drug industry.
Friday’s proposal falls far short of that goal. But it does include some ideas for giving the government better leverage in negotiating with drug companies. It calls for exploring whether to allow Medicare drug plans to pay different amounts for the same drug, depending on the illness involved. And it would experiment with “value-based purchasing” in federal programs, essentially a money-back guarantee in which a drugmaker promises to refund money if a medication does not work as expected. Drug companies and insurers are increasingly entering into these kind of arrangements, although the evidence is far from clear that they lower costs.
The administration also reiterated earlier proposals: making generic drugs free for some low-income older people on Medicare and allowing people to keep a portion of the rebates that are normally pocketed by the insurers that manage the Medicare drug program.
Persuade other countries to pay more
One key proposal would involve pressuring other countries to raise their prices for prescription medicines. Drug prices in the United States are the highest in the world; many countries with centralized health care systems have successfully negotiated lower prices from pharmaceutical companies.
Mr. Trump, echoing the longstanding position