Dan Mendelson on the Trump Administration's Efforts to Lower Drug Prices

This administration is very focused on pharmaceutical pricing, explained Dan Mendelson, MPP, founder, Avalere Health.

TranscriptDo you think efforts from the Trump administration, such as targeting PBM rebates and other policies outlines in the blueprint, are likely to lower drug prices?

This administration is very focused on pharmaceutical pricing. They’re talking about it a lot, it’s setting a cadence for a lot of the internal meetings. I was just on a panel yesterday with a very senior White House official who told me that every single day, they’re meeting on drug costs. So, it is something they’re certainly very focused on. And you’ll see the president coming into the midterm elections focused on it more. He’ll start to talk about it more, because there are really 2 healthcare issues that are driving this midterm election. The first is pre-existing condition, and the second is the cost of prescriptions drugs.

Then to the question of whether what they are doing is going to be effective—I kind of made the argument that they’re going to be talking about it a lot, so are they actually going to be effective in reducing costs? I think in some cases they will be. They have sped up the approval of generic drugs, and as such, they will reduce costs in those categories when they have done that. That’s legitimate.

Some of the other things will take longer to filter through the system. For example, changing the safe harbors that will enable outcomes-based contracting. That’s important, but it’s not going to overnight turn the tide and reduce drug costs. And then I think that the other reality is that we are in a market today where increasingly there are orphan drugs, super orphan drugs, personalized therapies, durable therapies that affect the genome as well as cell structure that are coming on to the market, and they’re going to be very expensive. They will cost anywhere from $250,000 per application to millions of dollars per application.

So, at the same time that the administration is focused on reducing the costs of the rest of the market, these eye-popping prices are going to be coming in. So, I do think that their task is complex, because they will not want to slow the pace of innovation and they will want to move things along, but then on the other side, they will want to be able to prove to consumers that they are doing something about the issue that consumers are facing.