President Trump's plan for reining in Medicare drug costs could help some people with serious health problems who get their drugs in their doctor's office or an outpatient clinic.

Under a three-part proposal outlined today by President Donald Trump, the U.S. and some consumers could see lower prices for drugs used to treat certain serious health problems, such as cancer, organ transplants, and rheumatoid arthritis.

The proposal takes aim at drugs that are given in doctors’ offices and outpatient hospital clinics, through Medicare Part B. The proposals do not drugs that Medicare beneficiaries fill in drugstores through Medicare Part D coverage.

More on High Drug Costs

Alex Azar, the head of the Department of Health and Human Services, says that the Trump administration is focusing on Medicare Part B drugs because costs for those drugs has grown much faster—doubling since 2006—than have costs for drugs covered under Part D.

The new proposals could bring down what the government pays for drugs overall, says Stephen Buck, an industry consultant and former executive of drug wholesaler McKesson, and co-founder of GoodRx, a drug pricing information site. By Buck’s analysis, the government  would save an estimated $3 billion per year—a reduction of about 10 percent of Part B drug spending. HHS estimates a five-year savings of $17.2 billion.

However, he notes, it probably won’t translate into lower premiums or other drug costs for most people on Medicare because drug costs are typically covered through Part D.

Still, the changes could have a substantial, direct benefit to a subset of patients: Medicare beneficiaries who get drugs while in their doctor’s office to treat serious health issues such as cancer, end-stage renal disease, rheumatoid arthritis, or organ transplants.

Under rules governing Medicare Part B plans, consumers often have to pay 20 percent of the cost of the drugs they get in those circumstances. And those medications can be extremely expensive, so a patient’s share can cost hundreds of dollars or more per visit. Cutting the drug cost overall could help slash those patients’ out-of-pocket costs.

For example, Trump cited ranibizumab (Lucentis), which is usually given by physicians in their office to patients suffering from macular degeneration. Medicare spent $1.04 billion last year on the drug, according to the Centers for Medicare & Medicaid Services.  

A single injection of that drug cost Medicare $1,950, according to a 2017 report from the Brookings Institution. So a person paying for that drug with her Part B plan would have to pay about $400 in coinsurance. If Medicare were charged less for Lucentis—say, 30 percent less, as the HHS estimates—the consumer’s share could drop to about $270.

To get these lower drug prices, the most dramatic part of the proposal would involve benchmarking at least some Medicare Part B drugs against prices in other nations, such as Canada, France, Germany, Sweden, and the U.K. Drug prices in those and similar countries are an estimated 44 percent lower, on average, than in the U.S., according to the HHS.

Under Trump’s proposal, certain U.S. Medicare drug prices would be lowered to international levels slowly over several years.

Another part of the plan would allow commercial vendors to negotiate directly for drugs covered through Part B—as they now do for Medicare Part D—by creating a new middleman that would also distribute and manage the drug inventory for clinics and doctor’s offices, and deal with billing. The idea is that vendors would be able to negotiate lower prices through improved competition.

Trump’s final proposal would change how doctors are reimbursed for medications prescribed under Medicare Part B—moving toward a “flat fee” payment as opposed to payments made as a percentage of how much the drug costs. This approach, the HHS says, could have the effect of removing incentives for physicians to prescribe high-cost drugs.