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In Announcing Prescription Drug Plan, Trump To Place Blame For High Prices On ‘Foreign Freeloading’

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Center for Medicaid and Medicare Services Administrator Seema Verma (official photo)

WASHINGTON, May 10, 2018 — Whether the topic is the Iran nuclear deal, the Paris Climate Accords or the North American Free Trade Agreement, President Donald Trump often grouses that other countries are taking advantage of the United States. It appears that he’s found another area in which he sees the U.S. is being taken advantage of.

A plan Trump will unveil tomorrow to reduce Americans’ prescription drug costs puts the blame for those costs on four “major problems,” according to a senior administration official.

Three of them are relatively well-known and mundane and are regularly mentioned by candidates of both parties when discussing high health care costs: High list prices set by drug manufacturers, rising out-of-pocket costs for consumers and patients and government rules preventing insurance plans from negotiating better deals for seniors.

But the fourth reason the official listed — “foreign governments free-riding off of American innovation” — suggests tomorrow’s announcement could have a decidedly Trumpian tone to it.

‘Foreign freeloading’

”The problem with the foreign freeloading is obviously that the US taxpayers…are largely paying for the R&D that goes into the development of new biologics and new pharmaceutical drugs, whereas much of the rest of the world — particularly other first world countries…freeloads off of that greater investment and don’t pay their fair share,” said the official.

The official blamed the “socialized system of higher price controls” used by other countries for Americans’ high prescription drug costs, but wouldn’t explain how exactly the Trump administration plans to force other countries to pay more or force American companies to charge more.

“There are things the US government can do to help address that problem, and that’s something that will be talked about,” he said.

Trump returns to a familiar refrain

Trump often complains that other countries are taking advantage of the United States because of “one-sided” deals resulting from previous presidents’ poor negotiating skills.

One such deal was the Iran nuclear agreement that Trump withdrew the U.S. from earlier this week, calling it “a horrible, one-sided deal that should have never, ever been made.”

Regarding the North American Free Trade Agreement, Trump told attendees at the Conservative Political Action Conference in February that “[W]e can’t continuously have other nations taking advantage of the United States like never before.  And this has gone on for a long time.

And when he appeared in the White House Rose Garden last summer to announce he was pulling the U.S. out of the Paris Climate Accords, he said the agreement was “less about the climate and more about other countries gaining a financial advantage over the United States.

Some government health systems are allowed to negotiate for lower prices

As for drug prices, is true that many new prescription drugs are developed through the taxpayer-funded research that has made the U.S. pharmaceutical industry a world leader, and it is true that countries with single-payer health care systems use those systems’ bulk buying power to negotiate higher drug prices.

But some of the health care systems run by the federal government — the Defense Department’s health system and the Veterans Health Administration — also use their bulk buying power to require drug companies to give them a better deal than most consumers get.

According to the Commonwealth Fund, a health care advocacy group, both systems require manufacturers to offer them prices equal to 24 percent off of a drug’s average price or the lowest price paid by other (nonfederal) buyers—as well as further discounts if a drug’s price outstrips inflation. Both also negotiate with individual manufacturers and are permitted to combine their efforts to negotiate even better deals.

Additionally, the little-known 340B Program (named after section 340B of the Public Health Service Act) requires drug companies to offer discounts on certain medications to facilities that serve low-income Americans.

The prescription drug benefit used by most Americans can’t get the same discounts

But Center for Medicaid and Medicare Services, which runs the government prescription drug program used by most Americans — Medicare Part D — doesn’t negotiate directly with drug companies for that program.

This is due to a provision inserted into the 2003 law then-President George W. Bush signed to establish Part D which prohibits such negotiations.

During her 2012 campaign for the Senate, then Representative Tammy Baldwin, D-Wis., blamed her opponent — Bush HHS Secretary Tommy Thompson — for the prohibition, the repeal of which was promised — but not accomplished — by former President Barack Obama.

“We have written into law, under Tommy Thompson’s watch, a prohibition for the federal government to be involved in negotiating with pharmaceutical companies for better prices for seniors for drugs,” Baldwin said. “That’s unbelievable. You know, if you buy in bulk, you get a better deal.”

While the private insurers that run Medicare Part D plans can negotiate individually, allowing CMS to negotiate directly for all Medicare Part D plans would require Congress to change that law.

The White House did not respond to Beltway Breakfast’s query as to whether Trump would ask Congress to change it, but the senior administration official said that in addition to legislative provisions in his 2019 budget proposal, Trump’s plan will use administrative actions to “[allow] greater flexibility in benefit design to encourage better price negotiations.”

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Andrew Feinberg is the Managing Editor and lead Washington Correspondent for Breakfast Media, and covers the White House, Capitol Hill, courts and regulatory agencies for BeltwayBreakfast and BroadbandBreakfast.com. He has written about policy and politics in the nation's capital since 2007.

Health Care

Conway Defends Trump’s Continuing Lie On GOP Attempts To Repeal Pre-Existing Conditions Coverage

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Counselor to the President Kellyanne Conway speaks at the 2017 Conservative Political Action Conference

WASHINGTON, October 24, 2018 — As the mad dash to the midterm election continues, Donald Trump continues to lie about Republican intentions toward the Affordable Care Act provision that requires insurance carriers to cover preexisting conditions.

At a Monday rally for Sen. Ted Cruz, R-Texas, who is up for reelection this year, Trump claimed that Republicans intend to ensure such protections — which were a centerpiece of his predecessor’s signature legislative accomplishment — will remain intact.

On Wednesday, he repeated the claim in a tweet, writing: Republicans will totally protect people with Pre-Existing Conditions, Democrats will not! Vote Republican.”

When asked by BeltwayBreakfast why Trump was continuing to lie about his own party’s stance on preexisting condition coverage, Counselor to the President Kellyanne Conway first suggested this reporter did not understand health care policy, claimed President Trump has a plan to cover pre-existing conditions, and suggested that Republicans are in favor of such coverage because an Indiana GOP Senate candidate provided preexisting condition coverage to employees of his small business before it was required by law.

However, the newfound love for requiring insurance companies to cover preexisting conditions which Trump and his GOP acolytes are now professing flies in the face of nearly ten years of GOP efforts to repeal the Affordable Care Act.

The GOP-controlled Congress managed to eliminate the ACA’s mandate to carry health insurance last year when it passed the Tax Cuts and Jobs Act,  using so-called reconciliation rules in the Senate to get around the possibility of a Democratic filibuster, which could only be ended if Democrats participated to provide the required 60 votes. 

However, GOP’s last wholesale attempt to repeal the Affordable Care Act — including the ban on denials for preexisting conditions — failed after the late Senator John McCain, R-Arizona, dramatically lowered his thumb to vote against it during an early-morning Senate session. Trump had wholeheartedly supported the repeal and complained about it for months at his frequent rallies, even as McCain lay dying of brain cancer.

While some Republicans in Congress have previously expressed a desire to try to repeal the ACA once more, a group of Republican state attorneys general is trying to get the courts to do the work for them with a lawsuit which seeks to invalidate the preexisting condition requirement because the individual mandate has been repealed.

Pressed further on why Trump now claims his party will do something it tried for years to do, Conway asked for evidence. When confronted with the GOP’s multiple votes to repeal the ACA, Trump’s support, and the administration’s failure to defend against the GOP-backed lawsuit, she dismissed the votes as irrelevant because Trump is not a legislator, even though he has supported the repeal wholeheartedly as a candidate and as president. 

When it was pointed out to Conway that under President Trump, the Department of Justice has taken the unusual step of refusing to defend against the lawsuit, she had no response other than to attack this reporter and ask for the next question.

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Health Care

‘It’s Time To End The Freeloading,’ Trump Declares As He Blames Foreign Single-Payer Systems For High Drug Prices

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Secretary of Health and Human Services Secretary Alex Azar speaks at the National Institutes of Health in Maryland (NIH Photo)

WASHINGTON, May 11, 2018 — President Donald Trump on Friday announced a multi-point plan for lowering sky-high prescription drug prices, which he blamed in part on previous presidents and foreign governments.

As we demand fairness for American patients at home, we will also demand fairness overseas,” Trump said during a White House Rose Garden event marking the plan’s introduction. “When foreign governments extort unreasonably low prices from U.S. drug makers, Americans have to pay more to subsidize the enormous cost of research and development.”

Trump noted that medications that are expensive in the United States often cost much less in foreign countries because their national health care systems are able to negotiate for better better prices — a situation the president called “unfair and ridiculous.”

Declaring that “it’s time to end the global freeloading once and for all,” Trump announced that he’d be charging U.S. Trade Representative Robert Lighthizer with remedying the situation, adding that that the U.S. has “great power” over its trading partners.

He promised the audience that the U.S. “will not be cheated any longer, and especially will not be cheated by foreign countries.”

‘Taking advantage’ is one of Trump’s greatest hits

Trump has made the idea that the United States is being taken advantage of by other nations a central theme of his trade, environmental, and foreign policies. His belief that other countries have tricked America into “one-sided deals” formed the basis for his withdrawal from both the Paris Climate Accords last summer, and more recently, the Joint Comprehensive Plan of Action, commonly known as the Iran nuclear deal.

Regarding the North American Free Trade Agreement, Trump told attendees at the Conservative Political Action Conference in February that “[W]e can’t continuously have other nations taking advantage of the United States like never before.  And this has gone on for a long time.

And when he appeared in the White House Rose Garden last summer to announce he was pulling the U.S. out of the Paris Climate Accords, he said the agreement was “less about the climate and more about other countries gaining a financial advantage over the United States.

While Trump decried other countries use of hard-nosed negotiation tactics, a major piece of his plan to lower seniors’ prescription drug costs involves allowing the companies that run Medicare Part D plans to use a variety of negotiating tactics to get better deals, and for the Center for Medicare and Medicaid Services to negotiate for better deals for hospital-prescribed drugs.

Azar avoids addressing the contradiction

When asked why CMS should be able to use bulk buying power to negotiate better prices but other countries’ systems should not have the same ability, Secretary of Health and Human Services Alex Azar declined to address the inconsistency except to decry the way single-payer systems shut drug makers out of countries if they don’t provide what he called a “below-competitive price.”

Instead, Azar deftly pivoted to addressing the difference between single-payer systems and the myriad insurance companies that run Part D plans, noting that the two are “completely different” because Part D providers negotiate in a “competitive environment.”

“We’re harnessing the power of the private negotiating market,” Azar said.

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