“Maybe this is not their final offer and maybe they’re not digging as deep as they perhaps could or should,” Michael Abrams, managing partner and co-founder of Numerof & Associates, said of the biopharma industry’s counteroffer to U.S. President Donald Trump on drug pricing.

But the offer “is not inconsequential,” he told BioWorld, noting that it reportedly could deliver $100 billion in savings over 10 years. In the larger scheme of things, “that’s not going to blow a hole in any big pharma’s balance sheet,” Abrams acknowledged.

Regardless of the impact to industry’s balance sheets, it would make a difference for Medicare. “Medicare is busy going broke, and they’re looking for some help,” Abrams said.

The proposal also offers the president the opportunity to say he delivered on his promise to lower prescription drug prices as he campaigns for re-election, whereas his threatened executive order granting Medicare and other federal programs “most favorable nation pricing” for prescription drugs would still be in the rulemaking process when voters head to the polls or their mailboxes in November.

“Trump is very anxious to give himself another gold star,” Abrams said.

While the details of the industry proposal haven’t been publicly disclosed, it reportedly involves a voluntary program, to be administered through the Center for Medicare & Medicaid Innovation, in which drug companies would offer participating hospitals a discount on Part B drugs administered to both inpatients and outpatients, Abrams said.

In addition, it would address out-of-pocket costs for Medicare beneficiaries by limiting their cost to about 5% in the catastrophic part of Part D coverage, Abrams said. “This should have a lot of appeal,” he added. “This affects a lot of people.”

Abrams noted that Part D is a big part of the reason prescription drug prices have become such a campaign talking point. With many copays at 20%, consumers, aka voters, are reminded of drug price every time they fill a prescription.

Since it would be voluntary, the industry proposal could avoid the legal challenges an agency rule likely would face, Abrams said. It also could be implemented quickly.

Signed last month along with three other orders related to drug pricing, Trump’s executive order on favored pricing would be challenged even by members of the president’s political party who see it as government price setting. Under the order, Medicare would be required to determine what other medically advanced nations pay for the most expensive drugs, and then instead of paying the highest price as it currently does, Medicare would pay the lowest price for the drugs, as would other federal programs.

The intent was to end “global freeloading” that has U.S. patients bearing the brunt of the cost of drug development and innovation, Trump said at the time. While the other orders signed that day have been published, the president told the biopharma industry he would hold off on the favored pricing order until Aug. 24 to give it an opportunity to propose its own solution to “substantially lower” U.S. drug prices.

Anyone could see that the executive order was “something of an empty gesture,” because it couldn’t be implemented before the election, Abrams said, but “pharma needed to come back with an offer.” If industry had ignored the president’s opening bid, it would have antagonized the administration, and that would not have been wise, Abrams added.

Given the timing until the election, Abrams said he expects the Trump administration will accept industry’s offer. However, there may be a little back and forth, with the administration looking for sweeteners.

While it’s not likely the proposal would make a difference at the consumer level over the next few months, it would still allow the president to say, “‘I said I’d do it and I did,” Abrams said. Since drug prices are such a high-profile issue for many voters, “that counts for a lot,” Abrams added. “They want something done. … In this proposal, it is the pharma companies that are making price concessions. You can argue that they’re not big enough … but it is progress.”

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