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Trump attacks drug companies for high prices, weighs options to curb monopolies

President Donald Trump points to a reporter to ask a question during a media availability in the Rose Garden with Senate Majority Leader Mitch McConnell of Ky., after their meeting at the White House, Monday, Oct. 16, 2017, in Washington. (AP Photo/Alex Brandon)

It is no secret that the United States pays more in prescription drug costs than any other industrialized country. It's a fact that has fueled outrage in Washington but has yet to translate into action to lower prices.

On Monday, President Donald Trump ripped into the drug companies, saying they are "getting away with murder," charging U.S. consumers far more than other countries and taking advantage of U.S. government-sponsored research and development.

The president pointed to the outsized lobbying influence the pharmaceutical companies have in Washington and the "unfair trade practices" of other countries that he said are the root cause of America's high drug costs.

"The world is taking advantage of the United States. They're setting prices in other countries and we're not," Trump continued. He added that either the United States will start paying less or other countries will have to pay more.

According to OECD data, the United States paid $1,112 per capita for prescription drugs in 2015, about 30 percent more than a Canadian citizen, whose government negotiates drug prices with suppliers.

Virtually every other industrialized country engages in price negotiations, or price-setting, except the United States, where many of the drugs are developed. In turn, much of the basic research for pricey, cutting-edge drug therapies is paid for by the U.S. taxpayers through the National Institutes of Health (NIH) and other public institutions.

Trump's mere mention of price-setting and potentially cutting into big pharma's profits sent biotechnology stocks tumbling on Monday, as the president publicly denounced the industry's "out of control" drug prices and efforts to buy-off politicians.

"They contribute massive amounts of money. Me, I'm not interested in their money. I don't need their money," the president said. He then recommitted to a campaign promise to get the cost of prescription drug prices "way down."

While there is bipartisan support in Congress for lowering prescription drug costs to consumers, there is still significant disagreement about how to get there. The president even acknowledged that he has not yet discussed his plans with the congressional leadership during a Monday press conference with Senate Majority leader Mitch McConnell (R-Ky.).

White House legislative director Marc Short later confirmed to Sinclair Broadcast Group that the president is still examining his options and is not currently backing any legislation. Instead, the White House is pursuing administrative actions in coordination with the Food and Drug Administration (FDA), for example, making it easier for companies to bring low-cost generic drugs to the market.

"There's not a piece of legislation we're backing right now," Short said, "but [the president] is anxious to encourage Congress to work on it."

Short anticipates President Trump will soon be meeting with lawmakers at the White House to review recommendations for getting drug prices down.

PRICE-GOUGING, MONOPOLIES AND FOREIGN COMPETITION

Since 1980, U.S. spending on health care has doubled from 9 percent of GDP to nearly 18 percent in 2015, or upwards of $3 trillion. In the coming decade, those costs are expected to continue to rise to 20 percent in 2025, according to the Centers for Medicare and Medicaid Services, with at least 15 percent of those costs from spending on prescription drugs.

In recent years, there has been a public spotlight on companies taking advantage of lax drug monopoly laws to charge patients exorbitant prices without any clear justification.

The case of Martin Shkreli, the hedge-fund manager turned biotech CEO turned felon, was perhaps the most egregious case of monopolization and price gouging. Shkreli's Turing company acquired the rights to a 62-year-old antimalarial drug, Deraprin, and overnight increased the price from $13.50 to $750 per pill.

While Shkreli became the poster boy for price-gouging, the practice is not limited to the Pharma Bro.

During a Senate health committee hearing on Tuesday, Sen. Bill Cassidy (R-La.), a former physician, noted that the price of insulin therapies for diabetics was increasing at an annual rate of 20 percent, even after companies producing brand-name drugs had recouped their research and development losses.

Other companies rely on loopholes in patenting laws to hold onto their monopoly and prevent lower-cost generic drugs from being developed.

Current law allows a company to maintain exclusivity on a drug for five years before a generic can be developed, but on average the monopoly lasts between 10 to 12 years, a practice Sen. Elizabeth Warren denounced as "fundamentally unfair."

"Drug companies game the system," she charged.

Just last month Allergan, the manufacturer of the dry eye drug Restasis, found a loophole and transferred its patent to the St. Regis Mohawk Tribe, allowing the company to exploit tribal sovereign immunity. The transfer was rejected by a Texas court on Monday with the judge calling it "a ploy," but the company will appeal the ruling.

Restasis hit the market in 2002 and netted its parent company $1.5 billion in sales last year.

Other lawmakers pointed to the uneven playing field, as foreign governments negotiate with U.S. companies for lower drug costs than those being paid by U.S. consumers.

According to a study by the International Federation of Health Plans, U.S. consumers often pay multiple times more for the exact same drugs. The arthritis drug Humira costs U.S. insurers $2,670 for a month's supply, more than three times what a consumer in Switzerland pays and twice as much as a consumer in the U.K.

Similarly with the Hepatitis C drug Harvoni, which costs more than $96,300 for a 12-week regimen in the United States and is almost half the cost in Switzerland and Spain.

A representative for the Pharmaceutical Research and Manufacturers of America (PhRMA), one of the largest drug company lobbyists in Washington, advocated "stronger trade agreements" to ensure U.S. consumers shoulder less of the cost for medical innovation.

However, as a number of lawmakers observed, addressing the high U.S. costs via trade agreements would shift the costs to foreign consumers, without addressing the underlying problem of high costs and unfair or opaque pricing practices.

DRUG INTERESTS SQUEAMISH ABOUT POPULAR PROPOSALS

On Capitol Hill on Tuesday, lawmakers on both sides of the aisle expressed their frustration with the skyrocketing drug prices and monopolization of the pharmaceutical market, but their proposals for improving the system were largely rebuffed by industry experts.

Among the popular proposals championed by Donald Trump and Sen. Bernie Sanders (I-Vt.) during the 2016 campaign, was the idea of importing drugs from Canada or the European Union.

Representatives for PhRMA, the American Pharmacists Association, and other industry interests rejected the proposal, first arguing it would introduce counterfeit drugs into the U.S. market and hurt consumers, and then arguing it would upset the carefully balanced ecosystem that is the current U.S. pharmaceutical market.

The notion of allowing the government to negotiate prices was met with even more alarm, as PhRMA argued the practice would undermine American innovation and free-market competition.

Trump has occasionally advocated allowing Medicare negotiate prices with drug manufacturers, but it is not clear that he wants to follow through on the plan. Analysis by the Congressional Budget Office (CBO) suggests that allowing the government to negotiate drug prices may not be the best cost-saver, concluding the move would have a "negligible effect on federal spending."

As many consumers know, non-brand-name generics are often the best low-cost treatment option. But even the producers of generics are concerned about consolidation in their industry, a pattern that, over time, could erode competition and cut back on the number of producers of low-cost generics and biosimilars.

"Three very large wholesalers ... have, through purchaser consolidation over the years, have gotten to a point where they're controlling 90 percent of the generic drug purchases in the United States," said Chip Davis, Jr., founder and CEO of the generic drug producer group, the Association for Accessible Medicines.

With only three buyers, AmerisourceBergen, Cardinal Health and McKesson, generic producers have been in a downward spiral, losing money year on year as brand-named producers see their profits soar.

Some lawmakers are calling for greater transparency as an initial, limited step for curbing high drug costs, but even that may prove difficult.

Sen. Lamar Alexander (R-Tenn.) chairman of the HELP Committee acknowledged that despite studying the issue, he is still perplexed by drug pricing.

"We've been working on health insurance, which we find to be very complicated," Alexander said of the Senate committee. "Where the money goes in prescription drugs is more complicated. I have yet to figure out where it goes."





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