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Drug Prices Likely to Rise in Trump Administration

Drug companies have the power to set drug prices and will want to make up for their lost revenue.

The price of drugs remains out of control, and President-elect Trump has vowed to address high drug prices. But, the Republican Congress is set to repeal the Affordable Care Act, which means that the drug companies will lose millions of customers with drug coverage, many of whom will no longer be able to afford their drugs. Because drug companies have the power to set drug prices and will want to make up for their lost revenue, drug prices are likely to rise 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 drug companies as much as pharmaceutical executives expected. Drug makers had to pay billions in fees under the ACA. They also were required 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. And, the Republican Congress has no plans to replace the ACA with equally robust insurance. Consequently, drug companies should be prepared to lose substantial revenue after the ACA is repealed and Congress imposes fewer requirements on the coverage health insurers offer.

Unfortunately, drugmakers can raise drug prices further to compensate for their loss of business. Indeed, they are likely to 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 hard to imagine that the Republican Congress will do what it would take to change this likely scenario.

Speaker Ryan and his Republican allies do not support legislation regulating drug prices. And, they have always supported 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 probable loss of sales stemming from the Republican leadership’s plan 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.

So long as the Republican leadership opts not to privatize Medicare — a long shot — older adults and people with disabilities 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 people with Medicare.

If you want Congress to keep its hands off Medicare, please sign this petition. Yesterday, more than one million petitions were delivered to Congress, and Congressional Democrats vowed to fight Medicare cuts.