This plan will meet from massive resistance from the drug industry. The article exposes the inequities in the current system. Here is the article:

Yesterday, the Trump administration unveiled a new proposal to substantially reduce the price of certain costly drugs administered under Medicare, by linking what Medicare pays for these drugs to what other industrialized countries pay. It’s a stunning move that could entirely reshape the way the pharmaceutical and biotechnology industries think about their business model.

This difference between what other countries pay for costly, patented drugs and what Americans pay has long irked President Trump. “For decades, other countries have rigged the system so that American patients are charged much more—and in some cases, much, much more—for the exact same drug,” Trump said. “In other words, Americans pay more, so that other countries can pay less.”



In the 1990s, the pharmaceutical industry poured most of its resources into developing “blockbuster” drugs that addressed large public health problems, like high blood pressure and high cholesterol. The most famous example is Pfizer’s cholesterol-lowering drug Lipitor, which went on to become the best-selling drug of all time, garnering global revenues in excess of $20 billion a year, before its patents expired.

But in the 2000s, a new strategy emerged, pioneered in large part by Swiss pharmaceutical giant Roche and its U.S. biotechnology subsidiary Genentech. The new approach would be to focus on so-called “orphan” or rare diseases, which affected fewer than 250,000 Americans, but where companies had more ability to charge higher prices with lower R&D expenditures.

If you want to develop a new drug to treat, say, diabetes, you face several extreme hurdles. The FDA will require that you do clinical trials in at least 20,000 patients that monitor the safety and efficacy of your drug over at least five years. Clinical trials of that scale cost more than $2 billion to do. If, at the end of that process, your drug manages to be better than the current standard of care, you have to market it in a competitive environment in which there are plenty of well-established inexpensive alternatives.

The Roche-Genentech strategy addressed this problem by focusing on rare diseases, where phase III clinical trials could be much smaller—200 patients, say, instead of 20,000—reducing R&D costs tenfold, with drugs that treated diseases for which there was little to no competition, and therefore could be priced more aggressively.



The Medicare program helped fuel this strategic change. Part B of the Medicare program pays for drugs administered in a doctor’s office, such as drugs requiring an intravenous infusion. The way things work today, once a drug is approved by the FDA, a drug company can set whatever price it wants, and Medicare is effectively obligated to pay it.

We talk a lot about the damage that government price controls can do. But the Medicare Part B system today is not a market, but rather a system of price controls dictated by private industry, in which drug companies can effectively charge taxpayers whatever they want for the drugs they deliver to seniors, enriching themselves and their shareholders.

This quirk in U.S. policy has fueled development of drugs that hit the sweet spot of Medicare Part B: drugs that are administered in a doctors’ office (as opposed to pills you can buy at your pharmacy), and drugs that treat diseases of old age (because Medicare is for people over 65). That sweet spot coincides with where we are increasingly spending more on prescription drugs: cancer, inflammatory arthritis, and the like.

LINK: https://www.forbes.com/sites/t...-index/#3392eaba4c3a