President Donald Trump's 2019 budget proposal, released Monday, Feb. 12, includes proposals to address the high cost of drugs, modernize the Medicare Part D drug benefit and modify the Part B drug payment.
"The budget proposes new strategies to address high drug prices, increase access to lifesaving medicines, rationalize the current payment incentive structure in Medicare Part D and Part B, and foster greater competition among generic pharmaceutical firms," according to the proposal.
The budget seeks new Medicaid demonstration authority for up to five states to test drug coverage and financing reforms.
"Participating States would determine their own drug formularies, coupled with an appeals process to protect beneficiary access to non-covered drugs based on medical need, and negotiate drug prices directly with manufacturers," the proposal stated.
In addition, the budget seeks to provide the Food and Drug Administration with greater ability to bring generic drugs to market faster by incentivizing more competition among drugmakers.
"The proposal ensures that first-to-file generic applicants who have been awarded a 180-day exclusivity period do not unreasonably and indefinitely block subsequent generics from entering the market beyond the exclusivity period," according to the document.
When a first-to-file generic application has not yet clinched approval due to deficiencies, the FDA would be able to tentatively greenlight a subsequent application instead of waiting for the first applicant to address the deficiencies in its application.
The budget also seeks to modernize the Medicare Part D drug benefit and the proposal includes requiring Part D plans to apply a substantial portion of rebates at the point of sale.
"For Part D sponsors, we don't view the proposed drug pricing reforms as having a significant impact - redirecting rebates to the point of sale (as [the Centers for Medicare & Medicaid Services] has already floated in prior rule-making) would be offset with premium increases," wrote Evercore ISI analyst Michael Newshel in a note.
In addition, the budget seeks to modify the payment for Medicare Part B drugs.
The release of the budget proposal came after the White House Council of Economic Advisers on Feb. 9 issued a report on how the government can help bring down drug prices.