Executive order under construction to peg US drug prices to lowest prices abroad, Trump says
As he mounts his re-election bid for 2020, president Donald Trump unveiled plans that an executive order is being prepared to implement a “favored nations clause” to reduce drug prices in the United States, in conversation with reporters on the south lawn of the White House on Friday.
“We’re working on a favored nations clause, where we pay whatever the lowest nation’s price is,” Trump said. “Why should other nations — like Canada — why should other nations pay less than us?”
Trump has long lambasted the pharmaceutical industry for its pricing policies. After capturing the presidency, Trump proclaimed drugmakers were “getting away with murder.” His administration has since unveiled a string of proposals to temper pricing, including one last year engineered to peg drug prices to overseas rates for Medicare beneficiaries. Whether this plan is the one he referred to on Friday is unclear.
The plan, designed to save Medicare more than $17 billion over five years, was revealed in late October ahead of a contentious mid-term battle. The HHS outlined an “international pricing index (IPI)” in which prices for drugs utilized by Medicare — the world’s largest drug purchaser — would be benchmarked against other nations, instead of the way drugs are currently priced: by calculating the average sales price and adding 6% for the providers who manage the drug supply. Essentially, instead of allowing cheaper drugs to be imported into the United States, Trump’s basic plan is to hold on to the drugs and import their prices.
This is a pilot program, however, and is not being primed for execution via an executive order. However, to nobody’s surprise, the proposal elicited the ire of the biopharma lobby, and drugmakers argued that a number of these nations do not accept new medicines due to their pricing policies, often restricting access or declining to adopt them altogether. Another issue is many drugmakers aren’t particularly forthcoming about the prices they settle on for their drugs following negotiations with foreign governments.
A proposal requiring drugmakers to divulge list prices in television ads is set to go into effect in the coming month, but many of the Trump administration’s other drug price proposals are still being ironed out.
On July 1, HHS secretary and former Eli Lilly executive Alex Azar suggested the administration had set records by saving patients $26 billion in generic drug costs just the first year and a half of the president’s term. “We have also proposed that backdoor rebates in Medicare Part D, which amounted to $29 billion last year, be delivered directly as discounts to patients at the pharmacy counter — as soon as Jan. 1, 2020,” he wrote.
On Saturday, Trump declared he had garnered success in driving down drug prices:
Last year was the first in 51 years where prescription drug prices actually went down, but things have been, and are being, put in place that will drive them down substantially. If Dems would work with us in a bipartisan fashion, we would get big results very fast!
— Donald J. Trump (@realDonaldTrump) July 7, 2019
But the claim was readily disputed. Politifact, owned by the nonprofit Poynter Institute for Media Studies, declared the claim “mostly false,” citing data from the federal government’s own database as well as an analysis published by the Associated Press in September that indicated that in the first nine months of 2018, there were 96 price increases for every price cut — although the rate of hikes is slowing.
Presidential hopeful Bernie Sanders also chimed in:
That's a lie.
– There were 96 price increases for every cut during 2018
– Drug prices increased 10.5% in the last 6 months
– The prices of 104 drugs rose by 13.1% on average last week
When we win, we won't wait for drug companies to end their greed. We will end it for them. https://t.co/H1KU9DA0SU
— Bernie Sanders (@BernieSanders) July 7, 2019
Data suggest that the United States spends nearly twice as much as 10 high-income countries on health care — driven by the high cost of labor and goods, including pharmaceuticals and devices — but actually perform worse on a number of population health outcomes.