2. Price setting vs. market competition
There is, obviously, an argument that government price setting works. It’s just not usually an argument Republican administrations make.
- But President Trump’s public comments on drug prices return frequently to the theme that Europe is taking advantage of the U.S., and we should be paying what they’re paying.
Between the lines: There's at least some conservative competitive element, as the new plan aims to weaken Europe's price controls before piggybacking off them.
- This is a subject of active debate in the health care world, but the economists I spoke to yesterday said the administration is probably correct to say that tying U.S. prices to European prices would drive up European prices, at least a little.
How it works: The idea is that, if drugmakers can no longer count on high U.S. prices to subsidize lower reimbursements abroad, they'll simply have to strike more favorable deals with European countries.
- Sure, a single public payer has a lot of leverage, the argument goes, but will the U.K. really walk away from providing its citizens a promising cancer treatment?
The plan also calls for a new purchasing arrangement for physician-administered drugs. Currently, doctors have to buy the drugs, store them, and hope they can use them and bill Medicare. HHS' proposal would have third-party vendors buy the drugs, then sell them to doctors.
- Azar and other HHS officials mentioned this arrangement a couple of times yesterday, as a way the new plan still tries to foster market competition.
- But the experts I spoke to said that if you're already starting from a fixed slightly-more-than-Europe price, it's hard to see how much more of a discount those vendors could realistically produce.
“It feels a little bit like, ‘If we mention competition in this document, no one will pay attention to the fact that we’re importing European price controls,'” Garthwaite said.