Fact checking Trump's drug pricing claims in the State of the Union

By Brook Baker

President Trump’s State of the Union Address contained a number of distortions, false claims and outright lies regarding drug pricing and access to medicines. Skyrocketing drug prices are a life and death issue for people with HIV in the U.S. and around the world. Here’s a side by side comparison of the facts versus what Trump said. Did we miss any lies? Let us know: admin@healthgap.org

What Trump said:
“The next major priority for me, and for all of us, should be to lower the cost of healthcare and prescription drugs — and to protect patients with pre-existing conditions. Already, as a result of my administration’s efforts, in 2018 drug prices experienced their single largest decline in 46 years.”

Here’s the truth:

Contrary to the President’s State of the Union Address, the list price of monopoly protected  medicines continued to escalate in 2017-2019, with the costs of some of the newest medicines costing hundreds of thousands of dollars a year.  The temporary, minor pause in inflating prices mid-2018 was a publicity stunt by Big Pharma and the President in what has been a relentless drive to maximize profits even if it means payers can’t pay and patients go without.

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What Trump said:
“But we must do more. It is unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place. This is wrong, unfair, and together we can stop it. And we will stop it fast.”

Here’s the truth: 

The U.S. pays more than other countries for medicines because the President and other policymakers do less to restrain excessive pricing than any other country in the world.  They obstruct prices negotiation efforts. They continue to pass laws and enter into trade agreements that strengthen, broaden, and lengthen monopolies on medicines. They don’t seek fair pricing returns on the public’s tax payer investments in pharmaceutical research and development.  What’s wrong and unfair is that the President lets drug companies get away with deadly high prices while he pretends that other countries are doing something wrong by trying to tame unbearable prices.

Low and middle income countries can’t afford the bloated prices that drug companies demand and shame on the President for suggesting that they should.  Those same countries can’t afford the trade agreements and trade threats of the U.S. and Big Pharma that seek to perpetuate and expand global monopolies on medicines.  Drug companies prefer to make high profits off a few rich people even when the vast majority of poor people in other countries are denied access to the fruits of scientific progress.

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What Trump said:
“I am asking the Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients. Finally. We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs down.”

Here’s the truth:  

Disclosing prices won’t accomplish anything if the untrammeled power to charge whatever the market will bear for life-saving medicines is not addressed.  The freeloading that the President should be concerned about is freeloading by drug companies that harvest innovation done in universities and at the National Institutes of Health and then monopolize the resulting products while they tweak their blockbusters to get new 20 year monopolies for minor tweaks.

Originally posted on the Health Gap blog.

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About the author: Brook Baker is a senior policy analyst for Health GAP (Global Access Project) and is actively engaged in campaigns for universal access to treatment, prevention, and care for people living with HIV/AIDS, especially expanded and improved medical treatment. He is also a professor of law at Northeastern University and an honorary research fellow at the University of KwaZulu Natal in Durban, South Africa.

Making America Healthy Again: Analyzing Trump's Take on the Social Determinants of Health [from Health Affairs Blog]

George Consortium member and Northeastern University professor Patricia Illingworth concludes on the Health Affairs Blog that the Trump administration shows "little interest in addressing the social determinants" of health, such as "education, socioeconomic status, poverty, the physical and social environment, employment, and discrimination, among others..."  

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Access to health care is critical for the health of individuals and for the well-being of the community, but health depends on more than medical care. Studies show that the social determinants of health, including education, socioeconomic status, poverty, the physical and social environment, employment, and discrimination, among others, are at least as important for health as is medical care. It is worth considering where the new administration stands with respect to the social determinants of health. President Trump’s budget, perhaps the best indication we have of his administration’s priorities, unfortunately appears to show little interest in addressing the social determinants.

The President’s Fiscal Year 2018 budget request, proposed back in May, targeted many of the social factors that impact health, slashing funding for education, energy, the environment, housing and urban development, among other social sectors. If the social determinants of health are underfunded, however, people’s need for health care will increase. As a result, these cuts would hurt the health and well-being of people living in the United States and would drive up the cost of health care. Take, for instance, the connection between education and health. According to economists David Cutler and Adriana Lleras-Muney, four extra years of education reduces the risk of heart disease by 2.16 percentage points and the risk of diabetes by 1.3 percentage points. People with more education are also less likely to smoke, drink excessively, use illegal drugs, or be overweight.

In a recent study published by the Brookings Institution, Princeton University economists Anne Case and Sir Angus Deaton show that “deaths of despair”—those associated with drugs, alcohol, and suicide—have risen significantly among middle-aged white non-Hispanic Americans without a college degree. In this respect, the United States is unique among the affluent nations Case and Deaton compare. They largely attribute this rise to a decrease in work opportunities for people with lower levels of education. Trump’s proposed budget, rather than boosting education and training, cuts funding for the Department of Education by 13 percent and for the Department of Labor by 21 percent. It also reduces funding for before-school, after-school, and summer programs by over $1.2 billion.

Living conditions also impact health. Asthma has been found to be the leading cause of children’s visits to emergency rooms, hospitalizations, and school absenteeism. Exposure to parasites and infectious agents, air pollution from vehicles, and the construction of buildings with poor circulation and little fresh air are among the causes of asthma in children. Not surprisingly, asthma is more prevalent in poor and minority communities. There is also evidence that public housing is itself a risk factor for asthma. Instead of increasing support for housing, Trump’s budget proposes a 15.2 percent reduction to housing assistance over a 10-year period.

The burden of the proposed budget’s assault on the social determinants of health will be borne primarily by the poor, but not only by them. Because people are social, the health of one person can impact the health of many people in a community. Health has some of the qualities of a public good. People are social; they flourish in the company of others. Their health is affected by the health of others and it affects the health of others. Contagious diseases are one example of how the poor health of one person can affect the health of others. Herd immunity demonstrates how the good health of some confers health benefits on others. To put it differently, health has a spillover effect.

Studies show that people are healthier when incomes are relatively equal, when early education is high-quality and accessible, and when poverty is low. For better or for worse, our health depends upon the health of other people, and their health upon ours. Unless we are prepared to live solitary lives, policy that affects the social determinants of health must contend with the inextricable connection between our health and the health of others.

Given the social dimensions of health, failure to ensure the health of all people with, for example, enriched educational opportunities and adequate housing and social programs, puts everyone’s health at risk. There are important social justice reasons for promoting the social determinants of health. But one need not care about justice and ethics to want to provide for the health of others. Self-interest speaks for itself. In this case, the message is loud and clear: ignore the health of others at your peril.

Can Trump Simply Stop Paying Subsidies to Insurance Companies?

By Elisabeth J. Ryan

In recent days, President Donald Trump announced, via Twitter, that "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!"  He was presumably referring first to cost-sharing reduction subsidy payments to insurance companies required by the Affordable Care Act and, second, to the fact that members of Congress and their staff are required to buy health insurance on the ACA market instead of being allowed on the federal employee health plan.  However, unlike most people who purchase insurance via the marketplace, Congressional staffers still receive an employer subsidy.  Ending subsidy payments to insurance companies could be catastrophic to the market - so can Trump simply stop paying them?

Section 1402 of the Affordable Care Act mandates that insurers reduce the amount of cost-sharing that individuals are responsible for; in turn, the government pays the insurer subsidies in order to make up for the discounts passed onto consumers.  However, the House of Representatives sued the then-Obama administration in 2014, claiming that such subsidy payments were illegal and unconstitutional because Congress never made specific appropriations for them.  In May 2016, the federal district court decided in favor of the House , finding that the executive branch (the Department of Health and Human Services in this case) making payments to insurers in the absence of a specific Congressional appropriation to do so is illegal and must cease.  The judge stayed her order, however, pending appeal (or, as the Republicans hoped, a change in the law entirely).  This has left the payments in a sort of limbo - the Obama administration continued to pay the subsidies and, thus far, so has the Trump administration.  But he has been hinting for months that wants to stop that practice; in response, numerous state Attorneys General filed a motion to intervene in the case, fearing that Trump would drop the appeal and allow the order of non-payment to stand.  On August 1, the court granted the motion, ensuring that the appeal will at least continue.  A crucial legal questions remains: even if the district court's order is overturned, would that simply allow the administration to continue making payments or is there some mechanism to compel the payments?

The House has relied on the fact that a specific appropriation exists for section 1401 of the ACA, which grants tax credits to some individuals to offset their insurance purchase costs.  And because section 1402 (the insurance subsidies) is not specified in that or any other appropriation, the court agreed that no such appropriation exists.  However, as the Obama administration and now the state AGs argue, the 1401 appropriation also covers 1402; that is, indeed, the fund used currently to pay the subsidies. 

If the government stops paying the subsidies, there is little question that the insurance market will destabilize quickly and critically.  While the details may vary based on state law, insurers could drop participation in the marketplace for the rest of 2017, could choose not to be part of the marketplace in 2018 at all, and would certainly raise premium costs for consumers, perhaps as much as 20%.

If Trump does announce that he will cut off payment of the subsidies to the insurance companies – the next payment is due on August 21 – states, insurance companies, and perhaps even consumers would likely sue immediately.  Indeed, some states may be preparing to file an action before he even announces a decision.  As California Attorney General Xavier Becerra has said, “We’re not going to wait to find out what Donald Trump wants to do.  My team is ready to defend these subsidies in court.”  AG Becerra has characterized the President’s threats to end the subsidies as “extortionist tactics.”  

Of course, Congress could remove the uncertainty (at least temporarily) about whether the subsidy payments will continue by passing a specific appropriation and may be attempting a bipartisan solution to do so.  But unless and until that happens, the insurance marketplace - and the healthcare plans of millions of consumers - remains in a precarious position.

Health Care for Trans Military Members is Not That Expensive

By Elisabeth J. Ryan

Today, the President tweeted that he is barring all transgender individuals from serving in the military "in any capacity."  One justification he claimed was their "tremendous medical costs."  But, as STAT points out, "at least two studies in recent years have found that the cost of medical care for transgender service members would be minimal."

A June 2016 study from the RAND Corporation estimated that there were between 1,320 and 6,630 transgender active-duty service members — out of 1.3 million service members in total — and noted that not all of them would seek treatment related to gender transitioning. The study also estimated that the cost associated with medical care for gender transition would only increase military health care expenditures by between $2.4 million and $8.4 million each year — an increase of between 0.04 and 0.13 percent.

A September 2015 study published in the New England Journal of Medicine reached similar cost estimates.  The study estimated that there were about 12,800 transgender service members who would be eligible for medical care. But it hypothesized that fewer than 200 would require care for gender transition each year, based on the percentage of transgender people who sought such care outside the military and the percentage of Australian service members who sought transition-related care.

The overall estimated cost to the Pentagon: $4.2 million to $5.6 million — what the study’s author called “little more than a rounding error in the military’s $47.8 billion annual health care budget.”