Office of Management and Budget director Mick Mulvaney says the Trump administration is looking for executive actions it can take to lower drug prices — and one idea that has been floated, he said at a panel discussion at the LIGHT Forum at Stanford University yesterday, is to require rebates in Medicare Part D that would be similar to Medicaid.
- Medicare Part D was "a tremendous giveaway to the pharmaceutical companies" because it didn't require drug companies to give rebates to the government the way Medicaid does, Mulvaney said.
- "We are looking at things we can do internally ... without Congress," he said. "The president keeps asking me again and again and again, 'What are we doing to fix this?'"
Why it matters: If the idea moves ahead — and Mulvaney didn't make it clear how seriously they're considering it — it would be a huge change for the drug industry. OMB spokeswoman Meghan Burris said only that "there are a number of ideas that have been, and are being discussed" to lower drug prices and encourage innovation.
The Medicaid rebates are calculated by a formula that's set in federal law, as opposed to Medicare Part D, where the only rebates are negotiated between drug companies and the private Part D plan sponsors. (The government isn't allowed to participate in those negotiations.) So the Medicaid rebates are bigger than the Medicare ones.
PhRMA's response: "Any type of government price setting in Medicare Part D would limit access to needed medicines and increase costs for beneficiaries. It also would destabilize a successful, market-based program ... The risks of these proposals clearly outweigh the benefits."