What Happens To Drug Prices In A Trump Admnistration

The price of drugs remains out of control, and President-elect Trump vowed to address high drug prices during his campaign. But, with the Republican Congress set to repeal the Affordable Care Act, the drug companies are positioned to lose millions of customers with drug coverage. Since Congress does not intend to replace the ACA with equally robust insurance, many people will no longer be able to afford the drugs they need. So, what happens to the price of drugs in a Trump administration?

Since passage of the ACA, the drug industry has seen enormous profits. Regardless, according to StatNews, Pharma is claiming that the ACA didn't help the industry as much as pharmaceutical executives expected. Drug makers had to pay billions in fees under the ACA. They also had to give drug discounts and rebates to people with Medicare through the Part D drug benefit.

Still, the ACA gave drug companies 22 million more customers with insurance to cover their drugs. So, the drug companies should be poised to lose significant revenue after the ACA is repealed and Congress imposes fewer requirements on the coverage health insurers offer.

Unfortunately, Pharma still has one card in its pocket. Drugmakers can raise drug prices further to compensate for their loss of customers. In fact, it is hard to imagine that they won't raise prices on many drugs significantly. And, notwithstanding Trump's recent claim to Time Magazine that he is going to bring down drug prices, it is equally hard to imagine that the Republican Congress will do what it would take to change this likely scenario.

Speaker Ryan and his Republican allies have never supported legislation that regulates drug prices. And, they are unlikely to repeal laws that give drug companies monopoly power over prices for many drugs. The only reason drug companies would not raise drug prices significantly is fear that, if they do, Congress would take some extreme action against them. That seems unrealistic.

Drug companies will also want to make up for the loss of sales that will no doubt come from the Republican leadership's desire to deregulate the health insurance industry. Laws that require insurers to provide more generous drug benefits are not on Speaker Ryan's or his Republican allies' agendas. So, it seems inevitable that insurers will further restrict access to costly drugs.

Health insurers would prefer to deter people with costly conditions who tend to use high-cost drugs from enrolling in their plans through a limited formulary or high cost-sharing. Indeed, they have many ways to cherry pick healthier enrollees. To keep premiums down and profits up, they will no doubt revert to using them as much as possible.

If the Republican leadership opts not to privatize Medicare, people with Medicare may be in slightly better shape than younger people with insurance. Some believe that even if the ACA is repealed, Congress will keep elements of the law that fill the gap in coverage under the Medicare Part D prescription drug benefit, known as the "donut hole."  If drug costs continue to rise, however, it's a good bet that Pharma will benefit far more than older adults and people with disabilities.

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