"The United States has a competitive marketplace that controls costs and provides patients with access to innovative medicines far earlier than in countries with price controls, and it's why we lead the world in drug discovery and development".
They would also get a drug add-on payment similar to the 6 percent add-on in the current Medicare reimbursement system.
One common cancer drug is almost seven times as expensive for Medicare as it is for other countries.
The proposal is structured as an experiment and would apply to half the country. "This happens because the government pays whatever price the drug companies set without any negotiation whatsoever".
It also highlights an increasing push by the president personally and his administration more generally to emphasize health care in the runup to the elections, an issue polls show is top of mind with voters.
U.S. President Donald Trump said on Thursday his administration is seeking to lower prescription drug prices by determining the price the government's Medicare program pays for some medications based on the lower prices paid in other countries. Republicans did not support the 2010 passage of the ACA, which enacted them, and the majority of them voted to repeal and replace Obamacare a year ago. His administration has worked to chip away at several ACA requirements, including supporting GOP repeal of the individual mandate in the party's tax overhaul and supporting waivers for Medicaid work requirements.
These higher prices mean that Medicare pays almost TWICE as much as it would for the same or similar drugs in other countries. Trump is expected to roll out a pilot program Thursday that would tie reimbursement for certain expensive drugs to the prices paid in other similar countries, POLITICO reports.
Creating an index of prices tabulated from what countries with more centralized health coverage pay would allow the administration to drive down USA drug costs without putting in place direct curbs on prices - though Azar rejected the idea that the administration was reading from the playbook of nationalized medical programs to bring the US on par with the rest of the world.
"Medicare could achieve significant savings if prices in the US were similar to those of other large market based economies", the report concludes.
Thursday's address represents the next leg in the Trump administration's quest to appear tough on the pharmaceutical industry. "I don't think so", the secretary said of drug makers. Nothing special, just the prices that other countries pay.
President Trump proposed on Thursday that Medicare pay for certain prescription drugs based on the prices paid in other advanced industrial countries - a huge change that could save money for the government and for millions of Medicare beneficiaries. "We're fixing it. That's called real-life experience, I guess", Trump added.
"The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation", Stephen Ubl, president of the Pharmaceutical Research and Manufacturers of America, said in a statement.
The ratio of average payment based on ASP versus the average worldwide target index would shift incrementally over a 5-year period in favor of the global target, until in the program's fifth year payment would be targeted at 126% of the average global price, as opposed to the 180% that the U.S now pays compared to those same average prices.
If finalized as proposed, the IPI payment model would establish a system in which private vendors acquire drugs, distribute them to physicians and hospitals, and assume the billing responsibility. The changes would only apply to some drugs in Medicare's outpatient program known as Part B, and not the most commonly used medicines sold at pharmacies.
Officials said the aim is to introduce more competition into Part B, whose spending on drugs has doubled since 2006.
Already, the pharmaceutical industry lobbying group came out swinging.
The HHS report "provides troubling insight into how the current worldwide drug pricing system has put America in last place,"Azar tweeted".
The HHS study, for example, shows that the USA spent about $1.7 billion in 2016 on Rituxan, a drug made by Biogen Inc. that treats non-Hodgkin's lymphoma. Among biotechs, Amgen and Regeneron earn a substantial portion of their revenue through Medicare Part B. The report notes Part B is not subject to restrictions on the drugs that are covered, meaning there is little incentive to tamp down costs. He made his announcement just ahead of the November 6 elections, with health care high among voters' concerns. But it's largely been business as usual for drugmakers even as Trump has predicted "massive" voluntary price cuts. Trump can complain about high drug prices all he wants.
Physician-administered drugs cost Medicare $27 billion in 2016. However, such patients have tended to seek out cheaper alternatives, leading to savings.
The Obama demonstration is entirely different from what the Trump administration is proposing, Azar said.
This article was written by Felicia Sonmez and Paige Winfield Cunningham, reporters for The Washington Post.
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