Trump Drug-Card Gambit Leaves Doubts About How to Pay for It
White House Still Working Out Drug Discount Card Funding, Timing
(Bloomberg) -- A day after President Donald Trump promised that Medicare beneficiaries would get a $200 prescription discount card within weeks, administration officials said all the cards wouldn’t be going out before the Nov. 3 election.
The White House is still working out how to pay for the plan and how to distribute the cards, a senior official with the U.S. Department of Health and Human Services said in a Friday briefing. The White House will say more about its plans in the near future, the official said, adding the cards will go out as soon as mechanically possible. Overall, the plan could cost $6.6 billion.
On Thursday, just 40 days before the presidential election, Trump said that Americans covered by the federal health-care program for seniors and the disabled would receive the cards within weeks to help pay for their costly pharmaceuticals.
The announcement, though, blindsided health-care companies and their lobbyists, according to people familiar with the matter.
At one major drug firm, the company’s government relations staff watched the speech on television and attempted to figure out what the president was talking about. At another major health-care company the scene was similar -- they had no idea what the program was, how it would work, if it was legal, or where the money would come from.
Spokespeople for the industry’s two largest trade organizations, Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization, said the groups haven’t been given any additional information on the plan.
Pharmacy benefit managers, which administer Medicare drug plans, also have questions about the drug cards, said Greg Lopes, a spokesman for the Pharmaceutical Care Management Association, in an email.
According to Lopes, these questions include: When will the cards be mailed? Which Medicare beneficiaries will get them? What authority will they be issued under? And how are drug manufacturers paying for them, given that the program cited as off-setting the cost is “years away from implementation.”
Bloomberg News on Thursday reported that the discount cards would be paid for by funds drawn from a demonstration program Medicare uses to test new payment systems. The cost is expected to be offset by future savings generated from new price cuts Trump has ordered for drugs bought by Medicare, according to a White House official.
Political Timing
It isn’t a coincidence that the president announced the drug discount cards with just a short time before the November election. Trump himself framed the cards as a political move, remarking in his speech Thursday that “Joe Biden won’t be doing this.”
Seniors are a problem for the president; after winning voters 65 and older by nine points in 2016, recent polls show him tied or trailing the former vice president in the demographic. The Trump administration, meanwhile, has gone as far to suggest it would force pharmaceutical industry to stomach the multibillion dollar cost of the discount cards.
“It’s the first time that money has gone from Big Pharma’s pockets to American seniors’ pockets, and this president made sure that it happened,” said White House Chief of Staff Mark Meadows said on Friday in a television interview.
Democrats called the cards a blatant attempt to buy votes from elderly people. Senator Ron Wyden of Oregon, the senior Democrat on the Senate Finance Committee, called the plan a “Taxpayer Funded Bribe” in a statement.
“Trump is resorting to gimmicky coupons that hide the fact that he has totally failed to lower drug prices and that Big Pharma is thriving under his watch,” Wyden said. “Drug companies will be paying as much for this gimmick as Mexico is paying for the Wall.”
Most Favored Nations
Earlier this month, Trump launched a process that could cut some U.S. drug costs by tying prices to those paid by countries with national health systems.
The so-called ‘Most Favored Nation’ order, announced in July,
has long been opposed by the pharmaceutical industry, which says
the move will slash their revenues and stifle innovation. At that same meeting, Trump invited the industry to the negotiating table to find an alternative solution to save patients money on their out-of-pocket drug costs.
But the Trump administration and pharmaceutical industry didn’t reach a consensus.
“These drug companies were offered the chance by the president to come in and negotiate and they didn’t negotiate to get to a result,” said HHS Secretary Alex Azar during a Friday morning television interview with Fox News. As a result, Azar said, Trump moved forward with the executive order.
Though savings derived from ‘Most Favored Nations’ order will be used to offset the cost of the $200 discount card, according to the White House official, that effort still is in its earliest stages of planning. It still may not produce savings for the government or reduce patient out-of-pocket costs for months, if ever.
Few Details
The Sept. 13 executive order offered few details, and is merely a first step that instructs HHS to begin the rule-making process to test “a payment model” for some medicines. The Most Favored Nations order hasn’t been materially implemented, and is certain to result in a legal battle with the pharmaceutical industry.
“We will use every tool available -- including legal action if necessary -- to fight this risky foreign price control scheme,” BIO CEO Michelle McMurry-Heath said at the time.
Even as HHS officials said on Friday that funding details were still being worked out, Trump’s Former Acting Chief of Staff, Mick Mulvaney, questioned the impact of the move.
“I’m not sure where they got the authority to do it,” Mulvaney said in a television interview with Fox Business on Friday morning.
“If we could have fixed health-care with executive orders alone, we would have done that back in 2017,” Mulvaney said. “But I think what you’re seeing here is an important message from the administration that’s says, look, this is what we stand for.”
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