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A Sigh of Relief (Gwen Moritz Editor’s Note)

4 min read

President Trump keeps ticking away at the list of campaign promises he made when he running for a job he didn’t seem interested in doing. One of those promises, of course, was to get a handle on the cost of prescription drugs.

Like many of Candidate Trump’s promises — from a big, beautiful wall that Mexico will pay for to better health insurance for everyone at a fraction of the cost — his promise to control prescription costs was long on curb appeal and short on structure. A Potemkin drugstore, as it were.

Sometimes he talked about access to affordable medicine as if it were a social justice issue. Sometimes he threw out the ever-popular idea of letting Medicare negotiate prices. The suggestion that American-made drugs could be reimported from countries with price controls got the rally crowds up on their feet.

It turns out that those approaches, so popular with Trump voters, are what Congressional Democrats prefer. When the president finally delivered his big policy speech earlier this month, pharmaceutical stocks actually went up.

Perhaps the expectation of more draconian proposals had been baked into the prices, especially after some sharp words from the administrator of Medicare & Medicaid Services just a few days earlier, and the uptick was the market equivalent of a sign of relief. Investors may not actually expect Big Pharma to be more profitable than it is now, but neither did the broad strokes of the Trump proposal make investors worry that the good times will stop rolling.

Trump did not propose reimportation, a ridiculously roundabout approach so passive-aggressive that it should come with a referral to a marriage counselor. Instead, he suggested that foreign consumers should pay more — allowing U.S. consumers to pay less. Theoretically.

Nor did he propose letting Medicare use its overwhelming market share to negotiate better prices for seniors and the government. Instead, if I understand follow-up explanations from Alex M. Azar II, the secretary of Health & Human Services, the president’s plan would hand off the job to pharmacy benefit managers (or similar) to negotiate prices the way they do for private health insurers.

Arkansas, you know, recently adopted first-in-the-nation legislation to license and regulate PBMs because their business model can end up forcing pharmacists to either sell drugs at a loss or refuse to dispense to patients. For some reason, this doesn’t sound like the right direction.

Trump’s plan also threw in the idea that PBMs could be required to act as fiduciaries. That sounds good until you ask who is the client whose best interests the PBM would have to put first. If it’s a for-profit insurance carrier, patients might not be helped at all.

Trump did propose one thing that I really like: requiring list prices to be part of prescription drug advertising. The fundamental problem with American health care is price opacity: We patients don’t know — and often can’t know — what we are spending until after we have spent it, and even then we have no idea whether the price is fair or wildly inflated.

Harnessing the power of a transparent market is such an appealing idea that Andrea Harris, an analyst with Height Capital Markets, called it “political red meat.” But will it happen? “We believe the risk of this is very low,” she said, and then only after protracted litigation.


If the state of health care isn’t already bringing you down, here’s something that will make you want to put a knife in your eye. Kaiser Health News, an arm of the invaluable Kaiser Family Foundation, introduced in February an online feature called “Bill of the Month.”

The first explored a young mother’s bill of nearly $18,000 for running tests on the urine sample that her doctor requested after back surgery. Her insurance company would have paid $100 for the entire battery of tests, but her doctor sent the sample to an out-of-network lab. The lab insisted that its price was fair but eventually settled for a mere $5,000.

March’s episode involved a 77-year-old patient who never asked the price when she filled the prescription that her PA wrote for a toenail fungus so mild she hadn’t noticed it. It cost almost $1,500 a month — and she had been set up for an automatic, mail-order refill for 11 months. (Lesson: Always ask the price.)

In April, the Bill of the Month came from a Florida hospital, which charged $10,175 to perform an abdominal scan on a 29-year-old man suspected of having appendicitis. The patient had paid less than $300 for a identical scan at an outpatient center three months earlier.

And this month we’re treated to a foot surgery that included $15,000 for four tiny bone screws that were estimated to have cost the hospital between $1,200 and $4,000.

I don’t think I could stand more than one of these stories a month.


Email Gwen Moritz, editor of Arkansas Business, at GMoritz@ABPG.com and follow her on Twitter at @gwenmoritz.
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