In last night’s State of the Union, President Trump addressed a number of health care related issues including prescription drug pricing, health care costs, and the defeat of HIV in the United States.

On Prescription Drugs

“Already, as a result of my Administration’s efforts, in 2018 drug prices experienced their single largest decline in 46 years.  But we must do more. It is unacceptable that Americans pay vastly more that people in other countries for the exact same drugs, often made in the exact same place. This is wrong, unfair, and together we can stop it.”

The President was alluding to a proposal his administration rolled out in May 2018, “American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs,” which is a plan aimed at counteracting rising prescription drug prices. It outlined four challenges faced by the American drug market:

• High list prices for drugs
• Seniors and government programs overpaying for drugs due to lack of adequate negotiation tools
• Rising out-of-pocket costs for consumers
• Foreign governments free-riding off of American investment in innovation

The plan proposed a blueprint for addressing these challenges by implementing four key strategies for reform:

• Improved competition
• Better negotiation
• Incentives for lower list prices
• Lowering out-of-pocket costs

Further, the President’s remarks show that the administration is serious about implementing its international drug pricing index (IPI) model which also rolled out in 2018.  The goal of the IPI Model is to lower costs for physician-administered drugs by resetting Medicare payments based on international prices and introducing competition. Under the IPI model, Medicare’s payments for select physician-administered drugs would shift to a level more closely aligned with prices in other countries. CMS plans to issue a proposed rule on this in Spring 2019.

On Health Care Price Transparency 

“I am asking the Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients. We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs down.”

What people really want to know is their exact out-of-pocket costs for treatment, particularly around a specific health concern such has having a baby or surgery. When you buy a car, you get a price for the entire car up front – you don’t have to worry that once you get home the engine manufacturer or seat manufacturer will send an additional, unexpected bill. While a majority of people in the U.S. have health insurance, when they schedule a procedure they have no clear idea of its true cost: what will they owe the hospital, doctors, physical therapists, or for medications and medical supplies after their insurance company pays its part.

An effort by the administration on drug pricing transparency last year was the controversial proposed rule that would require that direct-to-consumer television advertisements for prescription drugs and biologicals covered by Medicare and Medicaid include the “list price” of the product.

Some hospitals have also started to publish price lists in an effort to boost price transparency. The Cleveland Clinic, in particular, has been recognized for presenting costs in an easy to read format. Yet, even with a standardized price list, out-of-pocket costs to individuals vary widely depending on the type of insurance they have – whether it be Medicare, Medicaid, employer-sponsored coverage or some other kind of health insurance.

Though there are many other reforms necessary to give patients access to the information they need to avoid surprise medical bills, this initial attempt at price transparency is a step in the right direction.

On eliminating the HIV Epidemic

“In recent years we have made remarkable progress in the fight against HIV and AIDS. Scientific breakthroughs have brought a once-distant dream within reach. My budget will ask Democrats and Republicans to make the needed commitment to eliminate the HIV epidemic in the United States within 10 years. Together, we will defeat AIDS in America.”

Health and Human Services Secretary, Alex Azar, and senior public health officials said the proposed effort to eliminate the HIV epidemic relies on fresh insights into the origins of about half of new HIV cases. More than 1 million Americans live with the disease and there are close 40,000 new cases of HIV infections a year in the U.S. – a big reduction from the crisis years of the AIDS epidemic. This is an effort most people can get behind.