SOTU FACT SHEET – President Trump: Failing Hard-Working American Families on Prescription Drug Costs

February 4, 2020

When it comes time to negotiate the cost of drugs,
we are going to negotiate like crazy.”
Candidate Donald Trump,
February 4, 2016

Leading up to President Trump’s State of the Union on Tuesday night, our office is sending out a series of reports entitled “President Trump: Failing Hard-Working American Families” on President Trump’s record since he took office in 2017 and how his claims match up with reality.  This is one of those reports.

THE FACTS: Despite President Trump’s Promises to Bring Down Drug Prices, Drug Prices Have Been Steadily Going up Under President Trump

Apparently President Trump hasn’t noticed, but drug prices are not down in 2019.  Indeed, drug prices have not been down at all since January 2017 when he was inaugurated as President.  Instead drug prices have continued to steadily increase.

Indeed, over the last three years, drug price increases have far outpaced wage growth and the cost of living.  As a result, a 2019 survey of Americans by Kaiser Family Foundation found that four out of five Americans believe the cost of prescription drugs is unreasonable.  It also found that about one-third of patients say they’re skipping taking their medications regularly because of the cost.

For example, according to an analysis by Rx Savings Solutions, a consultant to health plans and employers, in the first six months of 2019, more than 3,400 drugs boosted their prices.  The average price hike for those 3,400 drugs stands at 10.5 percent, or about 5 times the rate of inflation, the study found.  The study also found that about 41 drugs had boosted their prices by more than 100 percent in the first six months of 2019.  Examples of drugs with triple digit price increases in that six-month period included such increases as the following:

  • Prozac – The price of Prozac increased 879 percent in the first six months of 2019.
  • Mometasone 0.1% Topical Cream – The price of this topical steroid (used for eczema, psoriasis, etc.) increased 381 percent in the first six months of 2019.
  • Promethazine/Codeine – The price of this pain reliever and cough medication (used to treat bronchitis, sinusitis, etc.) rose by 326 percent during this time period.
  • Guanfacine – The price of this treatment for ADHD Attention Deficit Hyperactivity Disorder rose by 118 percent during this time period.

Similarly, according to an analysis by the non-profit group Patients for Affordable Drugs, in the first week alone of 2020, 524 drugs boosted their prices.  Most of the drugs that had price increases in the first week of 2020 don’t have generic competitors.  Examples include:

  • Humira – The price of Humira (used to treat rheumatoid arthritis, Crohn’s disease, etc.) went up again in January, bringing the drug’s total price increase to 341 percent since market entry in 2006.  Humira has no generic competitor.
  • Lyrica – The price of Lyrica (used to treat nerve pain) went up again in January.  It has now increased 396 percent since 2005.  Lyrica has no generic competitor.
  • Tecfidera – The price of Tecfidera (used to treat multiple sclerosis) went up again in January to $8,275 for a month’s supply.  Tecfidera has no generic competitor.

THE FACTS: President Trump Has Broken His Campaign Promise to Enable Medicare to Negotiate Drug Prices, by Now Opposing H.R. 3, the House-Passed Bill That Institutes Medicare Negotiation

Donald Trump’s Opposition to H.R. 3, Lower Drug Costs Now Act, Which Institutes Medicare Negotiation

As the Hill has reported [“Trump Draws ire After Retreat on Drug Prices Pledge, 11/24/19”], “President Trump is backing off his 2016 campaign pledge to negotiate drug prices for Medicare with pharmaceutical companies, drawing fire from Democrats.  … During his campaign, Trump famously broke with Republican orthodoxy with his support for having the government negotiate lower drug prices.  ‘When it comes time to negotiate the cost of drugs, we are going to negotiate like crazy, Trump said in New Hampshire in early 2016.  … But after months of holding his fire, Trump is now publicly bashing Pelosi’s [Medicare negotiation] bill.  And while Trump still talks about the need to lower drug prices in general, he has not proposed an alternative drug price negotiation plan of his own.”

According to a recent Kaiser Family Foundation poll, 88 percent of Americans support Medicare having the power to negotiate drug prices. 

And yet, after all his campaign promises, President Trump has now decided to oppose Medicare negotiation – the single most effective measure to bring down drug prices – and the Medicare negotiation bill that Congress has passed.

On December 12, the House passed H.R. 3, the Lower Drug Costs Now Act, the comprehensive bill that includes historic, transformative reforms to bring down drug prices.  The legislation finally levels the playing field for American patients and taxpayers.  The bill:

  • Gives Medicare the power to negotiate directly with the drug companies, and creates powerful new tools to force drug companies to the table to agree to real price reductions, while ensuring seniors never lose access to the prescriptions they need. 
  • Makes the lower drug prices negotiated by Medicare available to Americans with private insurance, not just Medicare beneficiaries.
  • Stops drug companies ripping off Americans while charging other countries less for the same drugs, limiting the maximum price for any negotiated drug to be in line with the average price in countries like ours, where drug companies charge less for the same drugs – and admit they still make a profit.
  • Creates a new, $2,000 out-of-pocket limit on prescription drug costs for Medicare beneficiaries, and reverses years of unfair price hikes above inflation across thousands of drugs in Medicare. 
  • Reinvests in most transformational improvement to Medicare since its creation – delivering vision, dental and hearing benefits – and turbocharging the search for new cures.

According to the non-partisan Congressional Budget Office and the Joint Committee on Taxation, the lower drug prices from H.R. 3 transformational reforms deliver half a trillion dollars in savings to the federal government alone – and more than $100 billion dollars in bigger paychecks for people with employer-provided health insurance.  

House Democrats’ priority is now to continue a drumbeat across America to press President Trump and Senate Majority Leader McConnell to pass the Lower Drug Costs Now Act into law.

THE FACTS: While Opposing Medicare Negotiation, President Trump Is Proposing A Vaguely Defined Drug Importation “Plan” That Experts Say Won’t Work and Won’t Bring Down Drug Costs

As Politico [12/18/19] reported, “President Trump has promised that the plan his administration rolled out Wednesday to bring in cheaper prescription drugs from Canada will immediately lower medication costs.  Experts say the plan won’t work – and many write it off as a political stunt.”

As the Washington Post [12/18/19] reported, “The Trump Administration laid out a plan Wednesday to fulfill President Trump’s long-standing vow to lower prescription drug prices by allowing states, drug wholesalers and pharmacies to import some cheaper drugs from Canada.  But officials could not say when the plan might go into effect, and many questions about its possible scope remain unanswered.”

The key feature of this sketchy plan is to simply allow states, wholesalers and pharmacies to submit their own plans for drug importation to HHS for approval.  Furthermore, to win approval, they would have to prove to HHS that they could ensure all imported drugs are safe and also that their importation plan would achieve significant savings for consumers.  States and companies could find that the safety protocols required could be significantly costly for the state.

Critics of President Trump’s Drug Importation “Plan” Make Key Points Including:

  • Many of the most expensive drugs are excluded from this “plan,” including insulin and biologic drugs like Humira and other injectable drugs.
  • It is unclear whether this “plan” would ever produce any meaningful savings.  For one thing, under the plan, the onus is on states and companies to develop their own reimportation plans.  Under this sketchy plan, any potential small savings from this so-called “plan” would be a long ways off. 
  • Analysts have said it could be years before any drugs are actually imported from Canada – if they ever are – given myriad regulatory and legal requirements involved in finalizing and implementing the “plan.”

Experts Think Trump’s So-Called Drug Importation “Plan” Won’t Work

  • The drug companies could easily gum up the works of the Trump so-called importation “plan.”  For example, drug companies wouldn’t be incentivized to provide Canada with excess medicine that could be diverted to the United States.  Also, the “plan” would require importers to demonstrate that their product is the same as what’s available in the United States.  But importers would be dependent on the drug’s manufacturers to either do the testing or give them the materials for the tests.
  • Canada could also gum up the works of the “plan.”  The Canadian government has already fiercely pushed back against President Trump’s drug importation “plan,” warning that the drug supply for Canada’s 37 million residents cannot possibly fulfill the demands of the much larger U.S. market and that allowing importation could cause drug shortages for Canadians.  Canadians also argue that the prescription drug market in Canada is too small to have any real impact on what American consumers pay.  
  • Finally, few experts think that Trump’s reimportation “plan” will really lower costs.  Tellingly, Wall Street analysts are predicting that the “plan” will have little or no financial impact on the drug industry.  In public, industry officials gnash their teeth over the “plan.”  In private, they see little impact.  When the non-partisan CBO reviewed the prospects of importation in 2004, it concluded that it would lead to few drugs entering the United States and small savings.  And only drops from that pot of savings will flow to consumers.  “I think this will end up just as a dud,” said a former FDA official.  “It’s not an existential threat to the safety of the U.S. drug supply, nor is it a solution to the drug pricing issue.  It’s a sideshow.”

THE FACTS: President Trump Included A Big Giveaway to Pharma in His Version of USMCA, Hurting Consumers, Before Democrats Got It Stripped out

In 2016, Donald Trump campaigned as a Republican who was going to take on the drug industry and take such steps as giving Medicare the power to negotiate for lower drug prices.  In January 2017, he continued to talk tough about the drug companies.

But, over the last three years, Donald Trump has gone from a candidate promising to be a Republican who would take on the Pharma lobby to a President who often pursues policies friendly to Pharma.  One big example is his reversal on Medicare having the power to negotiate lower prices, which he promised throughout his campaign but now opposes.  Another key example is the Trump Tax Scam giving billions in tax breaks to drug companies, which used much of the windfall for stock buybacks, not research and development.

A third key example of President Trump’s Pharma-friendly style is that President Trump’s original version of USMCA that he negotiated with Mexico and Canada and was sent to Congress with a large giveaway to Big Pharma. 

This big giveaway President Trump included in his version of the USMCA was a provision setting a ten-year minimum exclusivity period (i.e. a minimum period of ten years for protection from generic competition from so-called “biosimilars”) for biologics across all of North America.  (Biologics are specialty drugs made with living cells.)

Currently, the period for protection for biologics from generic competition is only five years in Mexico, and only eight years in Canada.  (The period in the United States is 12 years.)

Hence, President Trump’s gift to Pharma would have the impact of increasing the exclusivity period for biologics from five years to ten years in Mexico and from eight years to ten years in Canada.  This provision would have numerous impacts, including the following:

  • This giveaway would be an enormous windfall to U.S. pharmaceutical and biotech companies selling prescription drugs in Mexico and Canada – helping to pad their already enormous profits.
  • By forcing Mexico to expand biologics’ patent monopoly from five years to ten years and forcing Canada to expand biologics’ patient monopoly from eight years to ten years, this provision would end up raising drug costs for consumers in Mexico and Canada.
  • This provision would also hurt U.S. consumers who seek lower-priced drugs in Mexico and Canada.
  • In addition, enactment of this provision would have undercut the efforts of many House Democrats to shorten the exclusivity period for biologics from the current excessive 12 years.  For example, President Obama had proposed shortening the exclusivity period for biologics in the U.S. from 12 years to seven years.

Over the last several months of 2019, House Democrats worked to achieve many critical improvements to the USMCA draft President Trump sent to Congress.  One of the key victories of House Democrats was to have this Trump giveaway gift to Pharma completely removed from the final version of USMCA, achieving savings for consumers throughout North America.  The final version of USMCA, with the numerous beneficial changes House Democrats were able to win, was ultimately passed by an overwhelming vote of 385 to 41 in the House and by 89 to 10 in the Senate.