Why Donald Trump would have the same problems as Democrats on Medicare drug prices

WASHINGTON — Donald Trump stunned the health care world Monday night with his call for Medicare to negotiate drug prices — an idea that’s straight out of Hillary Clinton’s and Bernie Sanders playbooks, and one that other Republicans won’t touch.

But as much as Trump is trying to make it sound like a common sense solution, health care analysts say he’d run into the same pitfalls that Clinton or Sanders would if they actually tried to write the idea into law.

At a rally in Farmington, N.H. on Monday, Trump declared that the Medicare program could “save $300 billion” a year if it negotiated drug prices. “We don’t do it. Why? Because of the drug companies,” Trump said, according to the Associated Press.

article continues after advertisement

It’s the same kind of populist pitch that Clinton and Sanders have made in their own campaigns: treat the pharmaceutical industry as greedy and powerful, and promise to use the bulk purchasing power of Medicare to drive a harder bargain over rising drug prices.

Until now, though, no Republican presidential candidate has embraced that kind of populism. To the extent that Trump’s GOP opponents have talked about drug prices, they’ve said they prefer greater competition and faster approvals of new drugs as the best solutions to the problem.

So when Trump embraced Medicare negotiations, he couldn’t have surprised Republican health care experts more if he had come to the rally in an “I Love Obamacare” T-shirt.

“He’s an extremely innovative Republican. Let’s just leave it at that,” said Douglas Holtz-Eakin, who was the domestic policy director for Senator John McCain’s 2008 presidential campaign and now runs the American Action Forum, a conservative think tank.

Ideology aside, though, other health care analysts who have looked closely at the negotiations idea say there are limits to how much it can accomplish.

There’s a basic trade-off that any proposal would have to grapple with: To have any real effect on drug prices, Medicare would have to be able to say “no” to drugs that might be expensive, but are still badly needed by people with chronic conditions.That means it would have to establish a list of covered drugs, known as a formulary, and be willing to leave drugs off it.

But that approach risks a massive political backlash and charges of shortchanging seniors. That’s what happened in 2014 when the Obama administration tried a milder proposal that would have gotten rid of some “protected classes” of drugs that all Medicare drug plans must cover.

Without more leverage to say “no” to expensive drugs, though, the negotiation proposals that are left — and have been embraced by Clinton and Sanders — don’t guarantee big savings for Medicare. The Congressional Budget Office, the main budget scorekeeper for Congress, has said the savings without a formulary would be “negligible.”

The main idea that might make a difference is the rebates that Clinton and Sanders want to give to the 9 million low-income seniors and younger people with disabilities who are eligible for both Medicare and Medicaid. The Congressional Budget Office says that idea could save $103 billion over 10 years.

No one in GOP circles, however, knows how Trump would get the $300 billion in savings he claims he could get from Medicare negotiations.

“That would be, like, the entire prescription drug market,” said Paul Howard, health policy director at the conservative Manhattan Institute, who cowrote an op-ed with former Republican Senator Tom Coburn that recommended competition as a better solution to drug prices.

“He thinks of himself as a great negotiator. He’s just not thought this through,” said Holtz-Eakin.

Trump’s campaign did not respond to requests for more details.

So far, there is no sign that other Republican presidential candidates are flocking to join Trump.

In a statement to STAT, Dr. Ben Carson said his proposal to create special, tax-free savings accounts to help Americans pay for their health care expenses is a better way to solve the problem.

“By enabling Medicare beneficiaries to participate in Health Empowerment Accounts and by providing more choices for insurance plans, we naturally reintroduce the free market to every aspect of health care, leading to lower prices not just on medication, but on procedures and visits, as well,” Carson said. “That’s the only way to truly bring down the costs of health care: by empowering the consumers, not the government.”

The other GOP candidates stayed silent, and their campaigns didn’t respond to requests for comment.

Howard says it’s likely that the Republican nominee, whoever it is, will have to spell out a solution for the biggest drug price hikes, given how much voters in all parties want Washington to take it on. But he said the best approach would be to increase competition in the drug market and have “a better conversation about value” — teaching consumers how to steer themselves toward the medications that are most likely to keep them healthy.

“I think what Trump is doing is tapping into a vein of concern,” said Howard. “I think left or right, you’re going to see people reaching for solutions.”

Subscribe to our
new hospitals newsletter,
On Call

Your guide to the people and ideas shaping hospitals and transforming the delivery of health care

Recommended Stories