Rick Pollack, president and CEO of the American Hospital Association: "The AHA appreciates numerous actions that the Administration has proposed, such as incentives to speed up the arrival of generic drugs into the market and reducing out-of-pocket costs for patients". "We are very much eliminating middlemen", Trump said. "Our patent system will reward innovation but it will not be used as a shield to protect unfair monopolies". In fact, "American Patients First" is the formal name for the administration's plan, which can be seen on the Department of Health and Human Services (HHS) website.
The speech will also go after other countries that pay less than the U.S. for drugs.
Instead, Trump cobbled together some old and new ideas to increase competition and improve transparency in the highly complex drug pricing system with the ultimate aim of wringing more savings for consumers.
The approach could also help people not on Medicare. Some observers commented on the shortage of detail in the blueprint. "A lot of good questions in the plan but very little actual action, especially against PBMs", Walid Gellad, who heads the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, tweeted.
"Whether it has a corresponding effect of lowering prices here in the United States is another story", he said. And it would require prescription drug plans for Medicare patients to pass on some of the discounts and rebates they receive from pharmaceutical companies. "This is not a one-and-done deal".
At the same time, while Trump voiced concern for health care affordability Friday, his administration has taken numerous other steps in recent months that patient and consumer advocates say are putting medical care further out of reach for millions.
Trump's speech singled out foreign governments that "extort unreasonably low prices from US drugmakers" using price controls and said USA trade representatives would prioritize the issue in trade deals.
Public outrage over drug costs has been growing for years as Americans face pricing pressure from all sides: New medicines for life-threatening diseases often launch with prices exceeding $100,000 per year. And tax reform lowered the corporate tax rate and eased the repatriation of overseas profits, a victory for drug firms.
Later in January, Trump met with the heads of pharma companies, where he reiterated his interest in bringing drug prices down in the US.
Make some Medicare Part D program incentives available only for drug makers that stop raising prices.
Biopharma investors breathed a sigh of relief today. Shares of the Nasdaq Biotechnology Index (Nasdaq:NBI) rose about 2.7 percent by day's end, while the shares of the SPDR S&P Pharmaceuticals ETF rose by about the same percentage.
Shares of the major USA companies in each of those sectors rose after the speech, with the S&P 500 health care sector, a broad gauge of large health care stocks, up 1.4 per cent. CVS Health's stock increased 3.2%, up almost $2 at market's close.
The proposals also include banning the pharmacist "gag rule", which Trump said prevents druggists from telling customers about lower-cost options so they can save money, and speeding up the approval process for over-the-counter medications so patients can buy more drugs without prescriptions.
But LeaMond noted, without criticizing the Trump proposal package, that AARP has supported letting Medicare officials negotiate for lower drug prices directly with the drug manufacturers.
Ben Fidler is Xconomy's Deputy Biotechnology Editor.