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President Trump has announced several proposed changes to how Medicare buys certain expensive prescription drugs, relying in part upon a benchmark price index of other developed countries, who negotiate lower prices. But critics wonder why the U.S. government doesn't do the negotiating itself. William Brangham speaks to Secretary of Health and Human Services Alex Azar, who is overseeing the plan.
The president's decision to try to lower some drug prices through Medicare is the biggest move yet by the administration to address the high cost of medicine in the U.S.
It is the latest in a series of policy changes from his administration this year. And it comes less than two weeks before the midterms, as health care has become one of the top issues on the campaign trail.
William Brangham has our interview with the president's point man on this.
President Trump announced several parts of this plan today, but here's the fundamental idea.
Medicare would change how much it pays for some of the most expensive drugs that seniors get at doctor's offices and hospitals. The new payments would be based on a benchmark index of what some other developed countries pay for the exact same drugs.
This is all part of a pilot project for Medicare Part B, as it's called, and it would be phased in over five years. Most of the other prescription drugs covered by Medicare, known as Medicare Part D, wouldn't be changed by today's move.
The government is also trying to adjust doctor's incentives, so they're not encouraged to prescribe the most expensive drugs.
Alex Azar is the secretary of health and human services. And he will be overseeing all of this. And he joins me now.
Welcome back to the "NewsHour."
Thank you, William. Good to be here.
So, the president said, very big announcement today, he referred to this as a revolutionary change. Can you just explain the basics of what this does?
So, just this morning, we released data showing that, in our Medicare program, where we pay for these infusion drugs — these are the high-cost drugs that physicians or hospitals administer to you — we are paying 180 percent compared to what Europe and Japan are paying for these very same drugs.
And that can often be as high as 500 percent higher than what they're getting. Why different? Because pharma is voluntarily giving these other countries of comparable economic power vastly better deals.
We get a bill, and we pay the bill, actually with a 6 percent markup on top. We are bringing competition to the system by referencing those foreign prices and the deals pharma is giving them now, and bringing that to the benefit of Medicare and to the Medicare beneficiary, who pay 20 percent of the cost of these drugs out of pocket.
So you're saying, if the Europeans and the Japanese and whomever else can pay X for this particular cancer drug, we want a price similar to that as well?
You bet, because, right now, in this part of the program, this is a government health care program, Medicare fee for service for our seniors and these physician-administered drugs.
Right now, we set a price for it. It's just a really stupid price. It is the list price, plus 6 percent. And we're saying, let's introduce some kind of competitive market-based other way of paying. And what better way is there than to look at what these very pharma companies are willing to sell their product for to other similarly placed countries and use that as a reference?
What about a concern that I have heard that, if we start asking the pharmaceutical companies to do this, that they're going to go to all of those other European countries and say, hey, we're not giving you such a good deal anymore, because they know that what they charge, the pharmaceutical companies, we're going to ask for a similar price, and so that the Europeans, the Japanese, and whoever else might start being asked to pay more, and that that could drive prices up here?
Well, we actually hope that they will finally go to these other economic powers and say, pay your fair share.
They have been free-riding off of American investment in innovation and research over all these years. We're — we are producing most of the profits for pharma. And it's time for others to pay their fair share.
As you mentioned, this covers the drugs under Medicare Part B, which are these costly drugs that you get, basically that your doctor gives to you in the hospital or in the doctor's office.
It doesn't cover all the other drugs that you buy at the pharmacy that you and I would buy if we went into CVS or Walgreens.
And, today, we spoke with David Mitchell, who's the president of Patients for Affordable Drugs. And we asked him about this issue of which category of drugs is covered.
Let's take a listen to what he had to say.
It's a step in the right direction, but there's a lot more to do. We believe strongly that we should be negotiating over drug prices, our government should.
In this case, the Trump administration that has decided to outsource negotiation to other countries. They're going to negotiate, and we're going to use the prices they arrive at. I don't understand why we just don't do it ourselves.
What do you make of that criticism? Why don't — why don't we use the power of Medicare to not just go after plan B, but go after all pharmaceutical drugs?
Well, listen, I have got great respect for David and his mission to bring down drug prices for consumers. So, let me start with that.
He's not correct here, in this case. Medicare Part D, this is the program where the senior citizen goes to the pharmacy to get the pills, that kind of medicine. That's paid for under a very different program, where individuals select health insurance plans.
These are the largest middlemen plans in America. They pull together tens of millions of lives. They actually negotiate as good or better discounts than Europe and Japan do. So we're actually — we have created the type of competitive marketplace there that secures benefits for patients and the program by using that power.
The only way doing what David suggests would cause us to get lower prices is if we created a single uniform national formulary or list of drugs and excluded access to drugs for America's seniors to get those prices.
My friend Peter Orszag, who was Barack Obama's OMB director, has said the same thing. We want the patient in the center. And we want choice of which medicines people have access to.
The pharmaceutical industry, as you might imagine, pushed back on this today. They said this plan is going to hurt their ability to do research and development. They said patients would get hurt. Their lead trade group said today that this plan would — quote — "jeopardize access to medicines for seniors and patients with disabilities living with devastating conditions such as cancer, rheumatoid arthritis and other autoimmune diseases."
What do you make of that?
You know, what the president called for today at HHS, whenever he announced this plan, is that we will bring down over the course of five years the reimbursement for these products by approximately 30 percent, on average.
That will still leave us paying 126 percent of what the Europeans and Japanese are paying. I don't think pharma companies are complaining that the French, the Germans, the British, the Japanese are not having access to their drugs at even lower prices. So, I don't get it. It's the same old tired talking points.
This plan protects patient access. It changes nothing on the Medicare benefit for people. They have full access to the medicines today and tomorrow and the day after, and they get to be in the driver's seat.
Some people have made note of the timing of all of this. We are just on the eve of a midterm election, where the Republicans are getting hammered on health care issues, the cost of drugs, preexisting conditions.
Did politics have anything to do with the timing of this rollout today?
Not one bit at all. This is something that we started working on many months ago.
This is an over 60-page spec on detailed specifications on a complex model of completely rewiring how drugs are paid for in Medicare Part B, including removing physician incentives in how drugs are actually even bought and distributed in the system.
We got this plan out as soon as we could because my boss wants action yesterday on drug prices. As soon as it was ready, it went out the door, and not a minute later, not a minute sooner.
He seemed to make that very clear today in his announcement.
I would like to shift gears for just a second. Earlier this week, a memo leaked out of your department that indicated that you are interested in a more rigid classification of gender in America, as male and female, and that there — that men who are born as boys and women as women never change over time.
And, as you — as you have heard, this has made transgender rights groups across the country furious, and they have argued that, if you go forward with this, you are in essence writing them out of existence legally.
Is this your plan? And, if so, why do you think it's important?
Let me just say we believe very strongly that all Americans are deserving of respect and dignity. That is core to HHS' mission to protect and defend the health and well-being of all Americans.
I would caution, do not believe everything you read in The New York Times.
So that's — are you saying that there is not a current plan to redefine gender?
I'm saying that we are committed to enforcing the laws as passed by Congress, including laws that protect against discrimination in health care and human services.
As to this particular issue, we are actually subject to a court order and are following that court order.
I mean, the president did — when asked about this the day after the memo came out, he said, we were looking at this.
I'm just curious as to what would be the rationale for it. I mean, your colleague at the head of the CDC said that — he seemed to imply that this would increase stigma for transgender people in America, and that it would hurt public health, not help.
Well, as I said, we're committed to protecting the dignity and promoting respect for all people, especially in our health care programs and in our human services programs.
We're also committed to implementing the laws that Congress actually passes, including laws on discrimination. And we're, with this matter, subject to a court order, and are implementing that — implementing our programs consistent with the court's order.
All right, Alex Azar, secretary of health and human services, thank you very much.
Thank you, William.
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