The price index idea, which the pharmaceutical industry and many medical providers have vigorously opposed, is still under review from the Office of Management and Budget and may begin as a five-year pilot program next year. But it would apply to only a small subset of the drug market, and would not affect the prices paid for more typical prescription drugs that are sold at retail pharmacies. An executive order on drug prices would most likely have no force of law on its own, but could direct the Department of Health and Human Services to pursue or expand this approach.

Outside of the doctor’s office or hospital, the federal government does not buy many medications itself. Under current law, Medicare’s main prescription drug program farms out its drug purchasing to private insurance companies, and is barred from negotiating with drugmakers directly. The federal government does buy drugs for some populations, including veterans and federal prisoners, but they represent only a small fraction of the nation’s drug market.

“The frustration that the U.S. pays much higher prices for drugs has been a persistent theme of this administration,” said Peter Bach, the director of the Memorial Sloan Kettering Center for Health Policy and Outcomes, in an email. “We will have to see what is ordered to understand what could actually be implemented by executive order. The scope will have to be pretty limited in that the government itself does very little purchasing of drugs. It is all done through intermediaries that we pay for the service.”

The Department of Health and Human Services published a white paper of possible drug pricing policies last year, and has begun rolling out regulations to help enact portions of it. Congress is also seriously considering a handful of measures related to drug pricing, some of which may become law this year.

A bill introduced by Senator Rick Scott, a Republican from Florida, has not advanced to a committee hearing, but comes the closest to what the president described Friday. Mr. Scott’s bill would link a drug’s approval by the Food and Drug Administration to a requirement that the drug’s retail list price in the United States be no higher than the lowest price charged in Canada, France, Britain, Japan or Germany.

Prices for major pharmaceutical stocks fell slightly just after the president’s remarks, but largely recovered by the market close. A policy that would substantially reduce the prices paid for drugs in the United States would have large effects on those companies’ earnings.

The White House press office said it had no comment on the president’s remarks. Riley Althouse, a spokeswoman for the Department of Health and Human Services, said both the president and the H.H.S. secretary Alex M. Azar II were “both firmly committed to pursuing any and every solution — including importation and most favored-nation policies — that will deliver real results and keep American patients safe.”

Trump and many other politicians seem to not know the difference between the other countries “APPLES” and our “ORANGES”..  yes the other countries have lower medication prices.  But they don’t have layers of publicly traded FOR PROFIT companies between the Pharmas’ and the pt or whoever is paying the final bill for the medication.

We have the Insurance company, the PBM and there is a 4th party that negotiates the discounts/rebates/kickbacks from the pharmas on behalf of the PBM’s – There is a post about this company .. somewhere on my blog.. but can’t find it out of the nearly 8000 posts on my blog..

The Veterans Administration is a good example of how these other countries function… the VA purchases medications on a bid basis with the Pharmas. There are no for profit middlemen in the distribution system between the Pharmas’ and the VA..  Some products are purchased via wholesalers but that industry works on a 5%-6% gross profit margin.

Some have stated that the insurance/PBM for profit industry and their infrastructure costs and net profits accounts for up to 50% of the cost the pt ends up paying.  When you consider that we fill abt 4 BILLION prescriptions at abt a average consumer price of $60 ..that is 120 BILLION that the insurance industry “sucks off” our healthcare system out of just the medication part of healthcare which is just 12% of our total healthcare bill – abt $10,000.00 per person.

If one looks back to the day when there was no PBM and most all insurance companies were not for profit mutual companies and most everything was brand name medications… before 1970 and apply the COLA/CPI for all those years… the average price would expected to be in the $30 range.. but now we have 80%-90% generics which is suppose to SAVE MONEY.. One would expect that the average Rx price would be in the 20’s.  But that is not our reality today.

Actually the FEDS are the ones that started all of this discount/rebates/kickbacks back in the 70’s.  The politicians decided that since Medicaid was such a large purchasers of medication that they deserved a “discount/rebate/kickback” from the pharmas’.  As I remember… it was a fairly modest amount 5%-10% from the brand name pharmas.

Of course, the brand name pharmas started raising their prices to compensate for the money that they had to “give back” to Medicaid.  Then Congress decided to “change the rules” to help more generics to come to the marketplace and pharmacies were reimbursed by PBM’s/Medicaid on price based on AWP (Average Wholesale Cost) plus a dispensing fee … typically, back then, $2-$3 dollars per Rx.

There was a lot of “game playing” with the publish AWP… pharmacies were able to purchase generics much below the published AWP, but they billed the PBM’s based on the published AWP.

Once again, Congress had to address the perceived problems in how much Medicaid was being charge for medications… so they created MAC’s (Maximum Allowable Cost) on the most popular generics… this replaced the industry standard of AWP for generics for pharmacies to bill from.  Of course, pharmacies … to protect their profit margins… only purchased a particular generic from the company that had the lowest price under the MAC price.

If Trump/politicians/bureaucrats believe that our system can function with the prices that other countries are functioning on without changing the inherent cost/profit structure of our system… someone is going to be hurt… it could be those employed by the insurance/PBM industry, it could be the community pharmacy system, it could be pts.

The insurance industry has one of the largest “pots of money” for lobbying, and they are not going to take cuts to their profits laying down.  After all it was this industry that convinced Congress to turn the entire Part D & Medicare Advantage program over to private insurance industry and prohibited negotiating Rx medication prices.