Adopting Price Controls for U.S. Prescription Drugs: Federal Policy Outlook for 2019 and Beyond

The Trump Administration, Congress and federal policymakers have focused growing attention on potential actions to address drug costs, including regulatory and legislative changes that affect both Medicare and Medicaid as well as private insurance. Most recently, the White House unveiled a new plan for reducing drug prices: letting Medicare set prices based on an international index. Unlike previous attempts at controlling the costs, the proposal would be carried out via the regulatory process and therefore would not require approval by Congress. Meantime, the President’s FY 2019 Budget proposed a number of policies impacting drug spending in Medicare, including making changes to Part D plan formulary standards and protected classes; excluding manufacturer discounts when calculating out-of-pocket costs for beneficiaries in the so-called “donut hole”; and giving the HHS Secretary the authority to move certain Part B drugs into Part D. Earlier in 2018, the Administration released a drug pricing Blueprint which combines proposals that are already under way with new initiatives that may or may not be adopted. In fact, many of the more dramatic proposals would require federal rule making or even legislation to be implemented on a broad scale. In one notable initiative, the Centers for Medicare and Medicaid Services (CMS) has already proposed a rule to require drug manufacturers to list a product’s monthly wholesale price, or the cost for a typical course of treatment, if it is greater than $35 for 30 days.