Questions Persist About Trump Plan for Medicare Drug Discount Cards

Kerry Dooley Young

September 25, 2020

The Trump administration on Friday declined to provide details about the timing or legal basis for the $200 drug discount cards that the president has said will be sent within a few weeks to about 33 million people enrolled in Medicare.

Trump on Thursday announced what appears to be an unexpected new federal expense of roughly $6.6 billion to help older Americans temporarily with pharmacy bills.

"Under my plan, 33 million Medicare beneficiaries will soon receive a card in the mail containing $200 that they can use to help pay for prescription drugs," Trump said during a speech in North Carolina on Thursday.

"Nobody has seen this before. These cards are incredible," Trump added. "The cards will be mailed out in coming weeks."

But on a call with reporters, officials from the US Department of Health and Human Services (HHS) had few concrete details to offer about these cards. The officials said the cards would go out "as soon as mechanically possible," but allowed that not all of them would be released before the election. Instead, they might be released over the next several months.

And the HHS officials repeatedly said they had no details to offer at this time on the legal authority and budget for this initiative.

The Affordable Care Act (ACA) of 2010 created an innovation center within the Centers for Medicare and Medicaid Services (CMS), which does have legal authority to put forward test programs. But the ACA directs CMS to use this authority for test programs that would reduce federal expenses and improve the quality of care provided to people enrolled in Medicare. Thus, it was not immediately clear how the card, seemingly a one-time distribution, could fit with the Center for Medicare and Medicaid Innovation mandate.

The trade group for drugmakers, the Pharmaceutical Research and Manufacturers of America (PhRMA), on Friday said it had no additional information about Trump's drug discount card proposal.

"As we've previously said, one-time savings cards will neither provide lasting help, nor advance the fundamental reforms necessary to help seniors better afford their medicines," PhRMA said in a statement.

Called "Gimmicky"

Senator Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, on Friday described Trump's plan as serving as part of his reelection bid. Trump is in a closely fought contest with Democratic contender, former Vice President Joseph R. Biden. 

"Trump is resorting to gimmicky coupons that hide the fact that he has totally failed to lower drug prices and that Big Pharma is thriving under his watch," Wyden said in a statement emailed to the press. "Drug companies will be paying as much for this gimmick as Mexico is paying for The Wall."

David Mitchell, a cancer patient and founder of the nonprofit group Patients For Affordable Drugs Now, said Trump was presenting a "dubious discount card" to try to make up for having failed to make a significant dent in the cost of prescription drugs during his administration.

"It is not at all clear if this is legal or how the president will pay for his scheme. It is perfectly clear, however, that this will not lower prescription drug prices for 328 million Americans," Mitchell said in a statement. "Americans need systemic, enduring reforms to our rigged drug pricing system, not election year gimmicks."

Executive Orders

Trump on Thursday also outlined steps he would like his administration to take to reduce health costs in general for people in the United States.

This outline was released as a presidential executive order, a term that can be confusing to the general public. Often, these orders serve only to reinforce goals set within an administration. These orders by themselves do not make changes in federal policies. They may be better described as statements or outlines.

In Trump's September 24 executive order, he encouraged Congress to act this year to prevent consumers from facing surprise medical bills. Congress has been stalled on this matter for more than a year, with lawmakers facing a difficult political decision. If they enact a law that pegs out-of-network bills to benchmarks, they will anger many physician groups. If they adopt an approach favored by physician groups and endorse arbitration, lawmakers will face the ire of many large employers and insurers.

In the outline released September 24, Trump said HHS "shall take administrative action to prevent a patient from receiving a bill for out-of-pocket expenses that the patient could not have reasonably foreseen" if Congress does not act by December 31. It's unclear what action, if any, HHS would or could take next year.

The Trump administration also on Thursday issued a final rule to set the terms under which states, pharmacies, and drug wholesalers could demonstrate to HHS that they could safely import medicines from Canada.

"In addition, the final rule requires that the sponsor explain how they will ensure their program will result in a significant reduction in the cost of covered products to the American consumer," the rule said.

At this time, HHS said it cannot estimate potential cost savings from this rule, as it is unclear now how much more inexpensive imported drugs might be. Many Americans already purchase drugs abroad, getting discounts in pharmacies in Canada and Mexico.

But the success of a drug reimportation approach on a grand scale would appear to depend on pharmaceutical companies shifting more of their supplies to pass-through nations such as Canada. Without such an increase in supply in pass-through nations, these countries would face shortages, likely leading their officials to seek to curb shipments to the United States.

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