The Trump Administration has launched a high-profile initiative aimed at reducing prescription drug prices, including release of a blueprint containing a series of short- and long-term policy proposals and a request for public comments on additional reforms.

First, on May 11, 2018 the Department of Health and Human Services released its “Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” which sets forth proposals in four broad areas: improved competition; lowering out-of-pocket costs; enhanced negotiation; and incentives for lower list prices. A number of the proposals were previously included in the President’s FY 2019 budget proposal, such as changes to the 340B discount drug program and inflation limits for Medicare Part B drugs. The Administration potentially could implement some of the new proposals under its current policymaking authority (e.g., reviving the Part B Competitive Acquisition Program; updating CMS’s drug-pricing dashboard to make price increases and generic competition more transparent; developing demonstration projects to test innovative ways to encourage value-based care and lower drug prices; and prohibiting Part D contracts from preventing pharmacists from telling patients when they could pay less out-of-pocket by not using insurance). Many of the most significant proposals would require Congressional action, however, such as reforms to the 340B program and Medicaid drug rebate program; moving certain classes of drugs from Part B to Part D to realize savings; and giving Medicare Part D plan sponsors significantly more power when negotiating with manufacturers. It is still unclear the extent to which the Blueprint will be translated into specific legislative proposals, or the schedule for Congress considering any such legislation.

Note that many of the Blueprint proposals are framed as questions for consideration rather than actual proposals at this point, such as:

  • Do pharmacy benefit managers’ rebates and fees based on the percentage of the list price create an incentive to favor higher list prices (and the potential for higher rebates) rather than lower prices?
  • Should manufacturers of drugs who have increased their prices over a particular lookback period or have not provided a discount be allowed to be included in the Part D protected classes?
  • How could indication-based pricing support value-based purchasing?
  • What policies should CMS consider to ensure inpatient and outpatient providers are neither underpaid nor overpaid for a drug, regardless of where it was administered?
  • What can be done to reduce the pricing disparity and spread the burden for incentivizing new drug development more equally between the U.S. and other developed countries?

On May 14, 2018, HHS released a request for information (RFI) seeking public input on the Blueprint. The RFI restates the questions in the Blueprint, covering such topics as: underpricing/cost shifting; biosimilar development; “fixing global freeloading”; site neutrality; fiduciary duty for pharmacy benefit managers; reducing the impact of rebates; incentives to lower or not increase list prices; inflationary rebate limits; exclusion of certain payments, rebates, or discounts from the determination of average manufacturer price and best price; and copay discount cards. HHS will accept comments until July 16, 2018. Reed Smith is preparing a more comprehensive analysis of the Administration’s drug pricing blueprint.