President Donald Trump on Friday blasted drugmakers and healthcare “middlemen” for making prescription medicines unaffordable for Americans, but healthcare stocks rose as his administration avoided aggressive direct measures to cut prices.
Trump made the remarks at the White House Rose Garden in a speech to introduce what he called “the most sweeping action in history” to lower drug prices. The effort comes as a growing number of Americans struggle with the cost of their medications, and cite healthcare concerns as a top priority for Washington ahead of congressional elections in November.
Trump said his administration would take aim at the “middlemen” in the drug industry who became “very, very rich,” an apparent reference to health insurers and pharmacy benefit managers (PBMs). He also said the pharmaceutical industry is making an “absolute fortune” at the expense of American taxpayers.
“Everyone involved in the broken system – the drugmakers, insurance companies, distributors, pharmacy benefit managers, and many others – contribute to the problem,” Trump said.
On Friday, Trump’s senior health officials outlined policy proposals to introduce more competition among drugmakers and pass on savings to consumers.
Shares of major drugmakers, insurers and PBMs rose after the speech. The S&P 500 healthcare index, a broad gauge of large healthcare stocks, closed up 1.5 percent, its biggest single-day percentage gain in a month.
“The plan was a lot less aggressive than investors expected,” wrote Alex Arfaei, analyst at BMO Capital Markets.
Trump also placed blame on foreign governments, saying they “extort unreasonably low prices” from U.S. drugmakers, forcing companies to charge more in this country.
“America will not be cheated any longer, and especially will not be cheated by foreign countries,” he said, adding that he has instructed the U.S. Trade Representative to make the issue a top priority with trading partners.
As the speech was underway, the Department of Health and Human Services released what it called a blueprint titled “American Patients First” with details of its plan.
It said near-term actions would include giving commercial plans that administer Medicare Part D prescription drug benefits for seniors more power to negotiate prices with drugmakers. Federal health plans would also test ways to pay for drugs based on their effectiveness.
The FDA would evaluate requiring drugmakers to include the list prices they set on medicines in their advertising. Drugmakers argue that list prices do not reflect actual cost after discounts and rebates.
Some of the administration’s longer-term priorities include restricting use of rebates, creating incentives for drugmakers to lower list prices, and investigating tools to address foreign government practices that it said could be harming innovation and driving up U.S. prices.
Health and Human Services Secretary Alex Azar, a former pharmaceutical company executive, said many of the actions the government was considering would not require approval by Congress and could take place through executive action within months. He said it would take years to restructure the U.S. drug system.
Trump also blasted the pharmaceutical and insurance industries for spending hundreds of millions of dollars on lobbying to “protect the status quo.”
His remarks follow a renewed focus on the influence of the drugmaker lobby, which spends the most of any lobbying group in Washington.