Trump's Plan to Lower Drug Prices Tests Limits of the Law

President Trump is testing how far he can assert a law banning government interference in negotiations between drugmakers and insurance companies that provide drug coverage to more than 42 million Medicare beneficiaries, reports the New York Times . With new drug prices often topping $10,000 annually, Trump has proposed a plan to cut prices, with possibly more government authority invoked. The plan would require insurers to reduce retail drug prices to reflect the discounts they get from drugmakers, typically as rebates paid to insurers and pharmacy benefit managers. Trump also has suggested Medicare "restrict or reduce" or perhaps even ban their use. Administration officials argue the rebates could be seen as illicit kickbacks because they profit an insurer for hiking the sales of a drugmaker's products. The plan mandates a fixed price for a medication, rather than rebates, in contracts between drugmakers and the insurers that offer Medicare's prescription drug plans (PDPs). Opponents cite unwanted interference, with Pharmaceutical Care Management Association Vice President Wendy L. Krasner warning Medicare would "dictate the details of pricing arrangements between the parties" — details that, under the Medicare statute, are supposed to be worked out in negotiations between drugmakers and PDPs. She stresses that Medicare officials "may not interfere in those negotiations," noting "this free market approach is generally credited for the overwhelming success" of Medicare Part D. The noninterference clause is core to the approach Republicans adopted when they added drug benefits to Medicare.