Saturday, 12 May 2018

Investopedia/Reuters: Trump Blasts Drugmakers, Middlemen for High U.S. Drug Prices

Investopedia
Trump Blasts Drugmakers, Middlemen for High U.S. Drug Prices
Partner Content
By Reuters | May 11, 2018 — 3:42 PM EDT
Share

U.S. President Donald Trump on Friday blasted drugmakers and healthcare "middlemen" for making prescription drugs unaffordable for Americans, but healthcare stocks rose as experts said the administration avoided taking aggressive and direct measures to cut drug prices.

Trump said his administration would take aim at the "middlemen" in the drug industry who became "very very rich," an apparent reference to health insurers and pharmacy benefit managers. He also said the pharmaceutical industry is making an "absolute fortune" at the expense of American taxpayers.

"Everyone involved in the broken system - the drugmakers, insurance companies, distributors, pharmacy benefit managers, and many others -- contribute to the problem," Trump said.

Shares of the major U.S. companies in each of those sectors rose after the speech, with the S&P 500 healthcare sector , a broad gauge of large healthcare stocks, up 1.4 percent.

Trump also placed blame on foreign governments, which negotiate lower drug prices than in the U.S., saying they "extort" unreasonably low prices from U.S. drugmakers.

Trump was speaking as his health deputies released a series of proposals to address high drug costs.

The Department of Health and Human Services released what it called a blueprint titled "American Patients First" with details of its plan. It said the administration's immediate actions would include allowing commercial plans that administer Medicare Part D prescription drug benefits for seniors more power to negotiate prices with drugmakers.

The U.S. Food and Drug Administration would evaluate requiring drugmakers to include the list prices they set on medicines in their advertising. Drugmakers argue that list prices do not reflect actual cost with discounts and rebates.

Some of the administration's longer-term priorities include restricting use of rebates, creating incentives for drugmakers to lower list prices in Medicare, and investigating tools to address foreign government practices that it said could be harming innovation and driving up U.S. prices.

Healthcare experts said Trump's plan sounded like rhetoric rather than substantive change for an industry where prices rise substantially more than inflation each year.

"There's not a big proposal here that is going to make a huge difference. There are a bunch of smaller technical changes," said Sam Richardson, Associate Professor of Economics at Boston College.

Regarding forcing other countries to pay more for drugs, Richardson said: "We don't really have the policy levers to get that to happen."

Health and Human Services Secretary Alex Azar said during a White House briefing that many of the actions the government was considering would not require the U.S. Congress, but could take place through executive action within months. He said it would take years to restructure the U.S. drug system.

Healthcare stocks were volatile during Trump's speech, with shares of companies involved in the pharmaceutical supply chain, such as Express Scripts Holding Co and CVS Health Corp , hitting session lows. But those stocks quickly reversed course, with Express Scripts shares up 2.4 percent and CVS up 3 percent. (Reporting by Yasmeen Abutaleb in Washington, additional reporting by Caroline Humer, Lewis Krauskopf and Michael Erman in New York; editing by Bill Berkrot)
Compare Popular Online Brokers
Provider
Name
Description
Advertiser Disclosure
Related Articles

    Investing
    Why Drugmakers Are Shaving Price Increases
    Drugmakers are responding to stiff criticism from President Trump and others
    Investing
    Drug Prices: Name Brands Doubled in Last 5 Years (ESRX)
    Express Scripts' Drug Trends Report, released Monday, revealed that the average price of brand name drugs rose 16.2% in 2015, with over one third of brand name drugs seeing price increases over ...
    Investing
    Healthcare Names Rally as Pharma Meets with Trump
    President Trump met with Pharma CEOs today at the White House and told them about his plans to streamline regulations.
    Investing
    Senator Orders Investigation of Orphan Drug Abuse
    Iowa Senator Grassley ordered an inquiry into possible abuse of the Orphan Drug Act by drug makers.
    Insights
    Drug Prices Gone Wild: Hospitals Feel Pain of Increases
    Hospitals and patients are suffering as prices soar for both branded and generic drugs
    Investing
    Orphan Drug Rules Are Being Manipulated
    It may be the time to revamp the Orphan Drug Program amid concerns it's turning into a scam.
    Investing
    Is Amazon Eyeing an Rx Drug Delivery Service?
    Amazon is reportedly talking to pharmacy benefits managers, eyeing the prescription drug market.
    Insurance
    The Cancer (and Other Drug) Shortage
    Your doctor may not tell you, but even in the U.S., life-saving drugs can be in short supply. Here's what to know and do.
    Financial Advisor
    6 Reasons Healthcare Is So Expensive in the U.S.
    Here's why America's healthcare still ranks low among developed countries.
    Insurance
    Does Medicare Part D Cover All Prescription Costs?
    It is important to understand the costs and prescription drug coverage of Medicare Part D.

RELATED FAQS

    How does government regulation impact the drugs sector?
    Learn about how drugs are regulated by the U.S. government as well as the role of the Food and Drug Administration during ... Read Answer >>
    What are the major barriers to entry for new companies in the drugs sector?
    Find out why barriers to entry for U.S. drug companies are so high and how the Food and Drug Administration, or FDA, inhibits ... Read Answer >>
    Do financial advisors get drug tested?
    Learn how financial advisor regulatory bodies do not require drug testing but many individual firms that hire advisors do ... Read Answer >>
    What are the differences between brand name drugs and generic drugs?
    Discover the process by which brand name drugs lose their patent, allowing generics to be manufactured, as well as the differences ... Read Answer >>
    What is the average price-to-earnings ratio in the drugs sector?
    Learn what the average price-to-earnings ratio is for companies operating in the drugs sector and why this metric is important ... Read Answer >>

Trending

    The Dummies' Guide To The Iran Nuclear Deal
    What You Should Know About Net Neutrality
    A Stock Sell-Off Vocabulary Guide
    Understanding Interest Rates, Inflation And Bonds
    Everything You Need To Know About Earnings

Hot Definitions

    Porter's 5 Forces
    Monetary Policy
    Gross Profit Margin
    Trailing Stop
    Rollover
    Pip

    Work With Investopedia
    About Us Advertise With Us Contact Us Careers

© 2018, Investopedia, LLC. Feedback All Rights Reserved Terms Of Use Privacy Policy
Post a Comment