Trump’s dispute with Azar gives new life to drug pricing plan

President Donald Trump has one big option to make good on his promise to slash drug prices: Tie the cost of U.S. drugs to the lower prices paid overseas.

There’s only one problem. It’s too late for him to make a dent in what people pay for their prescription drugs before the election.

The president’s outburst last week at Health Secretary Alex Azar over not getting credit for tackling drug costs has left Azar scrambling to get the plan the administration first floated in 2018 finished in time for Trump’s State of the Union address. There had been internal disagreement among Azar and other key health officials like White House Domestic Policy Council Director Joe Grogan over whether to release the rule on international benchmarking, as Azar wanted, or keep it for leverage as Congress keeps working on drug pricing, as Grogan has argued. Trump’s insistence on an imminent win helped bring the dueling parties together around issuing the rule.

Trump released a 44-page blueprint to lower drug prices in May 2018, but the administration has hit legal and political roadblocks while rolling out parts of that agenda. Meanwhile, House Democrats have passed a drug pricing bill that Trump praised, then opposed and that now is stuck in Congress with no Republican support.

The drug industry remains adamantly opposed to the idea of linking U.S. drug prices with what's paid in other developed countries, saying patients abroad face significant restrictions accessing new medicines and other treatments. "PhRMA continues to urge policymakers to abandon international reference pricing schemes ... and instead pursue reforms grounded in market competition and patient-centered care," said Nicole Longo, a spokesperson for the trade group for brand-name drugmakers.

Trump’s plan could arguably improve on a similar idea in a 2003 Medicare law that took six years to implement and ended up being a failure. But the administration has little ability to speed up the pace of federal rulemaking. That means even under the most favorable circumstances, the administration won’t be able to demonstrate any real change to consumers for years.

Trump health officials have discussed linking the cost of some Medicare drugs to what’s paid abroad since 2018 without following through and issuing a rule. Doing so now could give Trump a talking point for the Feb. 4 State of the Union but would almost certainly trigger immediate legal challenges from the drug industry, which argues the plan exceeds the authority Congress gave to test new payment systems when it passed Obamacare.

It’s also unclear whether any businesses would want to take on the risk of negotiating with drug companies to get their prices closer to international levels, as the Trump plan proposes.

Democrats believe they can capitalize on drug pricing regardless of whether Trump follows through on the international pricing proposal. Polling data, some of which prompted Trump's ire last week, indicates voters prefer Democrats on health policy.

"I think the cake is baked," said Brad Woodhouse, executive director of the pro-Obamacare group Protect Our Care. "He would have to move heaven and Earth to really change the political dynamic on health care."

Protect Our Care is among the Democratic groups pouring resources into pressing the party's advantage after House Democrats passed a sweeping drug bill empowering the government to directly negotiate prices.

The international drug price plan was slow to materialize for several reasons, according to industry sources and people familiar with the administration's thinking.

First, the drug industry finds the idea so objectionable that administration officials thought leaving the threat of implementing it out there could persuade drugmakers to stop fighting other drug pricing solutions — most notably a bipartisan Senate Finance Committee package that has received scant Republican support despite being championed by the panel's chairman, Chuck Grassley (R-Iowa).

Some within the administration also have ideological objections to the plan, viewing the idea as akin to government price setting, which is anathema to most Republicans. Indeed, pegging U.S. prices to what's paid abroad is usually embraced by Democrats, including most of those campaigning for the 2020 Democratic nomination.

Trump's health department has also had to rework the plan to satisfy the president, who had concerns that it didn’t go far enough to get Americans the lowest prices on drugs.

Under the original proposal, Americans would still pay about 30 percent more than other countries. Trump "did not find that satisfactory," Azar said in November. "His view ... is that America ought to be getting the best deal of developed countries. Those are the type of proposals we are working on."

White House and HHS officials have also weighed adding more drugs to the demonstration project — including medicines covered by Medicare Part D. The plan originally envisioned covering some expensive, physician-administered drugs covered by Medicare Part B.

Regardless of the scope, international pricing has gained traction as the administration struggles to mobilize congressional Republicans.

Azar has thrown his support behind the Senate drug pricing bill, lobbying lawmakers on the proposal and publicly calling for a floor vote.

"We’ve gotta get that package to the Senate floor, and we’ve gotta get that passed out of Congress," he told an Iowa radio station on Tuesday, adding that it would bring "huge relief" if it were signed into law.

But he's yet to move many votes. House Republican have pitched their own plan that excludes the most significant — and controversial — elements of the bill. And in the Senate, just 10 Republicans have indicated any kind of support for Grassley and Wyden's legislation amid widespread concern that penalizing drug makers for price hikes would be equivalent to imposing price controls.

"The main thing you don't want to do is come up with a construct that just arbitrarily sets drug prices," Sen. Thom Tillis (R-N.C.) told POLITICO.

Senate Republicans have largely dismissed concerns that Trump's failure to slash drug prices could cost them in this fall's election, and insisted they won't be pressured into supporting broad government intervention — even if it comes with the backing of the White House.

"The drive to get reelected is insidious up here," said Sen. David Perdue (R-Ga.), who's up for reelection this year. "That's what leads to all this bad policy."