Two weeks means 14 days to most of us. But it’s now been a month since President Donald Trump promised “voluntary massive drops in prices” from drug companies in two weeks — and there’s been no sign of them.
Presidential statements that diverge from reality are now commonplace. But drug pricing has been a Trump focus, and the subject of a hyped policy plan released last month. That makes the lack of progress particularly glaring.
Health and Human Services Secretary Alex Azar has been saddled with the task of explaining this situation, and in a Senate hearing Tuesday he made a case that the administration is living up to its promises. It wasn’t convincing. The administration’s already vague blueprint hasn’t gotten any more specific since it was released.
On the subject of those promised price cuts, Azar said some companies are willing, but are concerned that pharmacy benefit managers (PBMs) — the middlemen, essentially, that make a chunk of their revenue from drugmaker rebates — might retaliate and direct business to rivals charging higher prices for competing medicine and giving them bigger secret discounts.
This is a convenient excuse designed to deflect blame. The fact is, drugmakers don’t want to lower prices, voluntarily or otherwise, because it hurts profitability. Yes, PBMs play a role in the process, but price increases — not to mention extremely high initial price points — have been enormously lucrative for drugmakers as well. Nothing in the administration’s plan will change their unfettered pricing power.
Azar has suggested a rather extreme workaround to this issue, ending the rebate system entirely and replacing it with fixed contracts. That would theoretically make it easier for drugmakers to lower list prices or hike them less regularly, though it wouldn’t compel them on either front.
But it would be a radical shift to the system marking a dramatic redistribution from middlemen to individuals and drugmakers with unknown consequences. And Secretary Azar has yet to provide substantial details about how it would actually be enacted.