Trump's drug EO is 'a lot of bark, no bite': Former pharma executive
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00:00Nearly half of all Americans rely on prescription drugs for their health issues.
00:05So could President Trump's new executive order actually save money on medication?
00:10Today, the president ordered big pharma companies to slash prices on some of their medicines.
00:15The policy encourages these corporations to offer a price equal to the cost of the same drug in other countries,
00:21which is often much cheaper there.
00:23If the big pharma companies don't willingly comply, Trump will order Health and Human Services Department to explore other policies to bring the prices down.
00:34Some prescription drug and pharmaceutical prices will be reduced almost immediately by 50 to 80 to 90 percent.
00:43Big pharma will either abide by this principle voluntarily or will use the power of the federal government to ensure that we are paying the same price as other countries.
00:52Now, Americans pay significantly more for prescription drugs compared to what people in other developed nations spend.
00:59We spend up to 10 times as much on insulin and over four times as much on branded drugs.
01:05Take, for example, the popular weight loss drug, Ozempic.
01:07It can cost nearly, it's about $1,000 in the United States, but the same drug is sold in Canada for $155 and only $59 in Germany.
01:16Pharma stocks actually rose today in relief as Wall Street was worried that the president would actually propose legislation, which could have been more severe.
01:26So does this new executive order really mean anything?
01:29Does it mean you'll be spending less and saving more on your medications?
01:32And what does it mean for all the massive research and development that's required to bring any of these new drugs to the market?
01:39Joining me now is Bill Solomon, former pharmaceutical executive and CEO of the Accreditation Council for Medical Affairs.
01:45So this executive order basically asks drug companies to voluntarily lower their prices.
01:51Can President Trump force them to do that?
01:54Absolutely not.
01:55In his first administration, he tried to do this.
01:57He tried.
01:58It was blocked by a federal judge.
01:59The issue really with this executive order is it's missing a lot of details, right?
02:04So it's a lot of bark and no bite from my perspective because at the end of the day, you've not only got to get the pharma companies to agree, but you've also got to get, in the other countries, get them to agree to tell you what the retail price is.
02:16There's actually nothing to force them to do that, right?
02:18So for a lot of these pharmaceutical companies, there's very little incentive obviously to do that and it's very little that's going to be able to make them be enforced to do that.
02:28Why do the big pharma companies charge Americans so much more than they charge the Brits or the Canadians or the Germans?
02:33A big reason is the pharmacy benefit managers.
02:36We call them the middlemen.
02:38The pharmacy benefit managers negotiate drug pricing, rebates, discount on behalf of the health insurers.
02:44So for example, if you're a company that makes Ozempic, right, Ozempic could be put on a particular tier in the formulary for the insurance company and based on that negotiation by the PBM where it's put in that tier, that determines the price, the copay and how much reimbursement you're going to get.
03:00Okay, but in other countries, what happens is the government actually negotiates directly with the pharmaceutical company for a price for all of the citizens of their country.
03:10So the leaders of Great Britain negotiate a price for Ozempic in Great Britain that is $93 for Ozempic, while in the United States, we're relying on this middleman who is sticking us with a price that's in excess of $1,000 for the exact same dose of the drug.
03:27Yeah, that's basically what's happening, right?
03:28These middlemen are forcing pharma manufacturers to have to hike up the price.
03:33Remember, for a pharmaceutical company, they have to make the bulk of their, all of their profit before the patent life expires and runs out.
03:40So for these pharmaceutical companies, they're being forced in a lot of ways to have to hike up the price to make up for the rebate they have to give back to the pharmacy benefit manager.
03:48So we're basically, American citizens are funding the research and development that these companies and the profits that these companies make off these drugs and that everybody else doesn't have to pay for.
03:58Yeah, pretty much. Absolutely. The other thing, too, that's important is that in the other countries, part of the equation that the pharma company calculates right in their mind,
04:08and I worked in the pharma industry for many, many years, is what will the market bear?
04:12They know very well that certain markets will bear a certain cost and other markets will bear a higher cost.
04:18So that's factored into the pricing model, unfortunately.
04:20Every business does that. You charge more for the same item in New York City than you do in Wichita, Kansas, because you can sell it here for more money.
04:29Okay, here's the question. There are some, the drug companies do argue there are some advantages to, believe it or not, us paying more.
04:42One of the advantages, they say, is we get access to a lot more drugs than people in Europe or Canada or other countries buying the drugs do.
04:50We get it faster than people in those countries do.
04:53So we don't have to wait as long, and we have a greater ability to buy medications that we may want than people in other countries do.
05:02I mean, we've all, you know, yes, Ozempic's a lot cheaper in Great Britain, but you might have to wait nine months to get it.
05:07Right. Yeah, so this is really important.
05:10In the United States, you do have better access, you have better care overall versus other developed countries.
05:15But remember, the number one reason for care delay in America is prior authorizations.
05:20Many patients today, they get denied services, treatment.
05:25They have to go through a lot of roadblocks and hurdles to get access to these medications.
05:29We're talking about GLP-1 agonists, all the weight loss drugs.
05:32Many of those weight loss drugs, you have to get a lot of prior authorization.
05:35You have to do a lot of things first before you're even eligible for those drugs.
05:38That's an important consideration. It's not that easy.
05:40And remember, for this particular executive order, the impact is really on Medicare.
05:45That was my next question.
05:47It's Medicare, who are Americans over 65, on Medicare, not anybody else under.
05:52So he was just promising in that sound clip he would lower the price of drugs for people on Medicare by 50 to 90 percent.
05:59Right, right.
06:00First of all, is that feasible?
06:01And second of all, what does that mean for all the rest of us?
06:03Here's the thing. In the United States, over half of the population, they get their insurance through what?
06:10Through their employers. It's private insurance.
06:12So for the rest of us, it's not going to actually make much of a difference, right?
06:16No money savings?
06:17No. Actually, there could be a higher copay because the pharma company may offset the loss of revenue on the Medicare side,
06:25which is about 20 percent of the country.
06:26By charging all the rest of us more.
06:27Exactly, yeah. And remember, most of those patients that are on Medicare, the elderly patients, they're taking generic drugs.
06:34Generic drugs, on average, the average in the United States is about $20 on average.
06:38So even if you were to reduce the price by 50 percent, the savings is still minimal overall, right?
06:43So I think this is important to kind of keep in mind.
06:46Again, I think a lot of details are still missing from the executive order.
06:50The headline sounds very, very good.
06:52Yes, it sounds great.
06:52When you dive a little bit deeper, that it becomes a little less clear.
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