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Trump Reveals New Plan to Lower Drug Prices

President Trump has an alternate plan for dealing with high prices, as he revealed in a speech on Friday, May 11. The new roadmap called "American Patients First" aims to lower list prices of prescription drugs by increasing competition and negotiation opportunities for Medicare.

"Everyone involved in the broken system — the drugmakers, insurance companies, distributors, pharmacy benefit managers and many others — contribute to the problem," Trump said, adding that even the government has been a part of the problem, referring to the way "previous leaders turned a blind eye" to rising costs.

He brought his point to bear on the pharmacy-benefit managers and other market segments that negotiate pricing and discounts with drugmakers, as CNBC recapped his speech on Friday.

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"The middlemen became very, very rich. Whoever those middlemen were, and a lot of people never even figured it out, they're rich. They won't be so rich anymore," he said.

These managers have also been caught up in the debate, with drug manufacturers blaming them of trying to profit from high drug prices by negotiating bigger discounts, which then tends to push prices up some more, as Health and Human Services Secretary Alex Azar pointed out.

Trump's new plan hinges on rebate-sharing changes in Medicare drug plans. PBMs like Express Scripts and CVS Health, in turn, have lauded the new plan. "PBMs have long encouraged manufacturers to offer payers alternative ways to reduce net costs. Simply put, the easiest way to lower costs would be for drug companies to lower their prices," the group said in a statement," the group said.

Democrats have been leaning on Trump on the days leading to his healthcare speech to deliver on his campaign promise, as The Hill recalled. Back in 2016, Trump has been in support of calling on Medicare to directly negotiate drug prices, an idea that ran counter to Republican ideas at the time.

"We're not calling for Medicare negotiation in the way that Democrats have called for," an official said on Thursday, May 10, a day before the speech. "We clearly want to make important changes that will dramatically improve the way negotiation takes place inside the Medicare program," they added.

Instead, "American Patients First" is centered on changes that could push drugmakers to lower prices on their own. Some of the measures outlined in the plan include promoting generic drugs and increasing competition by encouraging copies of existing formulations.

There are also steps that require drug manufacturers to publicly disclose list prices for their drugs in advertising, particularly on television.

It was a compromise that had health care investors sighing in relief. Stocks of firms like CVS and Express Scripts were sliding before Trump's speech, but by the end of the day, shares were already hitting daily highs.

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