Trump ups the stakes with 'granddaddy of them all' drug pricing executive order. But he could be running out of time
When President Donald Trump signed four executive orders in late July aiming at lowering drug prices, details of the most controversial — “the granddaddy of them all,” according to Trump — were conspicuously missing.
Almost two months later, the text is finally here. And it’s already been expanded.
The EO instructs Health and Human Services Secretary Alex Azar to test a payment model in which Medicare would pay no more than the “most-favored-nation price” for doctor and outpatient services (Part B) as well as prescription drugs (Part D). While rule-making plans were already in place for the former, regulations for the latter require a separate, new process.
Which means it may not be implemented any time soon. But that doesn’t stop industry advocates from blasting the order with urgency.
PhRMA had reportedly submitted a counteroffer in August to the White House after Trump asked them to propose an alternative. It would have effectively cut Part B prices by 10%, versus 30% as the administration was shooting for, per Politico.
Echoing his previous comments, PhRMA president Stephen Ubl calls the most-favored nation policy “irresponsible and unworkable,” as it doubles down on “a reckless attack on the very companies working around the clock to beat Covid-19.”
“What’s worse is that they are now expanding the policy to include medicines in both Medicare Part B and Part D, an overreach that further threatens America’s innovation leadership and puts access to medicines for tens of millions of seniors at risk,” its statement reads. “Rather than emulating countries that allow politicians to arbitrarily decide what medicines are worth and what diseases are worth investing in, we should use existing trade enforcement tools to prevent them from freeloading off American innovation.”
Similarly, BIO’s Michelle McMurry-Heath described the move to move forward with the plans to essentially “import foreign price controls” as “dumbfounding.”
“That is why we will use every tool available — including legal action if necessary — to fight this risky foreign price control scheme,” she said.
Although different in name, the idea of referencing what other countries, many of whom have single-payer healthcare systems and aggressive negotiation tactics, pay in order to bring down American drug prices dates back at least to 2018. The Centers for Medicare & Medicaid Services began working on a proposed model dubbed the international pricing index focused around Medicare Part B. A subsequent healthcare bill passed by the Democrat-controlled House included a provision that would empower HHS to negotiate prices for 250 prescription drugs based on the same index. The prices would apply to government and commercial markets alike.
Big Pharma leaders and small biotech investors alike have long opposed the proposal in its various incarnations, citing a forecast reduction in new medicines. They were joined by Senate Republicans, who had drafted their own pricing bill focused on out-of-pocket costs.
They may not be alone in this particular fight, Michael Ganio, the senior director of pharmacy practice and quality at the American Society of Health-System Pharmacists, said on Twitter.
New EO affects CMS payment (drug reimbursement), not drug prices. So where does that leave hospitals and pharmacies who actually pay for the drugs? Looks like they are the ones who will be paying for the difference unless they can negotiate prices down. https://t.co/ovzkyhmNu2
— Michael Ganio, PharmD, MS (@mganio_ASHP) September 13, 2020
Yet again, with just a few months left in his first term, Trump’s last-ditch effort to tackle drug prices still faces significant hurdles that can stretch beyond the current term, noted Rachel Sachs, associate professor of law at Washington University in St. Louis.
As a reminder, in December 2019, the House (led by the Democratic caucus) passed a bill that would've used international reference pricing to lower the price of drugs in Medicare. Trump threatened to veto that bill. https://t.co/eRECNqLzTD https://t.co/VuoSojDb4f
— Rachel Sachs (@RESachs) September 13, 2020