President Donald Trump delivered his long-awaited speech on drug pricing Friday.
"The government has also been part of the problem because previous leaders turned a blind eye to this incredible abuse".
Trump said he wants to eliminate "middlemen" in the drug industry - which includes pharmacy benefit managers and wholesalers - and he criticized industry lobbyists for making a fortune at the expense of taxpayers and patients.
"Our plan will end the dishonest double-dealing that allows the middleman to pocket rebates and discounts that should be passed on to consumers and patients", Trump said.
Top officials at the Department of Health and Human Services also focused on the imbalance between drug prices at home and overseas, writing in a Fox News op-ed that "foreign countries and their government-run health-care systems bully our drug manufacturers into unrealistically low prices, allowing other countries to freeload off of American innovation".
"This is a major restructuring of a huge portion of the US economy".
"We expect President Trump's upcoming speech on lowering drug prices to be rhetorically critical of pharmaceutical manufacturers and the supply chain, but he will not propose actions that actually threaten drugmakers' ability to set high prices for their product". Importantly, this strategic direction will move the Food and Drug Administration down its current path of trying to increase competition by paving the way for more approvals of generics, biosimilars and biologics, Klasmeier added.
Senate Democratic leader Chuck Schumer criticized Trump for not targeting the pharmaceutical companies more aggressively and for his stance that other countries that now pay less than Americans for the same drugs should pay more.
Medicare is the largest purchaser of prescription drugs in the nation, covering 60 million seniors and Americans with disabilities, but it is barred by law from directly negotiating lower prices with drugmakers.
That idea has always been supported by Democrats but is a non-starter for drugmakers and most Republicans in Congress. "The idea that asking Germany to charge their citizens more for drugs will help Americans is a cop-out and the height of absurdity that nobody believes", Schumer said.
Health insurance companies and other providers spent another United States dollars 200 million to protect the status quo and to keep prices artificially high.
In its annual report last month on the protection of intellectual property around the world, the Office of the U.S. Trade Representative, in addition to European Union nations and Japan, also specifically criticized the drug pricing and reimbursement policies of Canada, India, South Korea and New Zealand.
Pharmaceutical companies often launch their drugs with high initial prices.
The U.S. spent $1,162 per person on prescription drugs in 2015, according to the Organization for Economic Cooperation and Development.
"Consumers are ultimately going to be the judge of this announcement", said Dan Mendelson, a health care consultant. PBMs, which process drug claims and negotiate drug discounts with pharmaceutical companies, are paid, in part, on the spread between the list price and rebates, which gives them incentive to raise list prices, critics argue.
But his proposals hardly put a scare into that system. In other cases, companies directly pay would-be competitors to stay off the market in so-called "pay-to-delay" deals.