At first glance, last week’s decision by Pfizer to postpone price hikes seemed like a victory in the fight to reduce the crushing costs of medications.
President Donald Trump certainly saw it that way, declaring it was “great news for the American people!”
Indeed, Pfizer’s plans and Trump’s talk of curbing drug prices are far more placebo than meaningful treatment — and patients will continue to feel the pain in their wallets.
Pfizer said it will defer price increases until the end of 2018, or when Trump’s so-called drug-price “blueprint” goes into effect — whichever comes first. So patients are getting only a brief reprieve with no assurance of any significant or more permanent relief to come.
Trump’s blueprint, released in May, doesn’t go far, providing broad promises and tough rhetoric but few detailed reforms and no timetable. Experts suggest any change is unlikely before year’s end, which means that by January, Pfizer, a drug giant with $52.6 billion in revenue, could go right back to hiking prices on widely used drugs like the pain medication Lyrica and the blood-pressure drug Norvasc.
Trump has boasted about being a dealmaker, a negotiator. But his drug plan doesn’t include one of the most fundamental steps for drug-price reform: Allowing the Health and Human Services secretary to negotiate drug prices with Big Pharma on behalf of Medicare beneficiaries.
But the pharmaceutical lobby is strong. According to the Center for Responsive Politics, the pharmaceutical and health-products industry spent a staggering $279.6 million on federal lobbying in 2017.
So, here we are, with a proposal on the table that omits giving Medicare any bargaining power.
This is an area in which government is a significant player and therefore has the potential power to affect the broader marketplace.
But giving bargaining power to Medicare is also a solution the pharmaceutical companies rail against, saying it will damage drug research, innovation and development.
Of course, drug prices won’t drop solely with a Medicare fix. But they also won’t get cheaper with Trump’s very incremental suggestions. Requiring the disclosure of drug prices in advertising is important, but won’t have a big impact on patient costs. Targeting pharmacy benefit managers — the middlemen who manage prescription-drug benefits — and the rebates they get from drugmakers is feasible and worthwhile, but might not have any real effect on the prices consumers pay, since the manufacturers set prices.
Other ideas, like somehow forcing other countries to pay more for drugs without a clear strategy or leverage, appear unrealistic. And there’s little in Trump’s plan to remove obstacles to or otherwise promote the manufacture of generic drugs, which should be a critical component of any effort to reduce drug prices.
All of that might explain why the reaction to Trump’s plans from pharmaceutical giants and their investors has been tepid, and why Pfizer was so willing to raise certain prices even after May 30, when Trump promised “voluntary massive drops in prices.”
Trump has an opportunity to transform his fuzzy blueprint into meaningful action. He can show just what kind of a negotiator he is, move beyond the placebo and prescribe a plan that can end the pain in the pocketbook.