President Trump Signs New Executive Order on Prescription Drug Prices
President Donald Trump expanded the number of drugs covered under a “favored nations clause” by Medicare Part B and Medicare Part D with a new Executive Order intended to lower the cost of prescription drugs in the United States announced Sunday.
The order links U.S.-paid prices to those paid by other governments around the world. U.S. consumers typically pay a much higher cost for prescription drugs than patients in other countries. The new Executive Order replaces one issued in July that now includes both Medicare plans. The initial order was never fully acted upon as the president believed he could use the order as a stick and carrot method to negotiate a better deal with pharmaceutical companies. That never happened.
“The federal government is the largest payer for prescription drugs in the world, but it pays more than many smaller buyers, including other developed nations. When the federal government purchases a drug covered by Medicare — the cost of which is shared by American seniors who take the drug and American taxpayers — it should insist on, at a minimum, the lowest price at which the manufacturer sells that drug to any other developed nation,” the order reads. “It is the policy of the United States that the Medicare program should not pay more for costly Part B or Part D prescription drugs or biological products than the most-favored-nation price.”
The new order commands the Secretary of Health and Human Services to “immediately take appropriate steps to implement his rulemaking plan to test a payment model pursuant to which Medicare would pay, for certain high-cost prescription drugs and biological products.” How quickly this can be implemented remains to be seen. Particularly as the pharmaceutical industry is widely opposed to the plan.
On Sunday, Stephen Ubl, head of the Pharmaceutical Research and Manufacturers of America organization, condemned the order.
“The administration has chosen to pursue the most favored nation policy – an irresponsible and unworkable policy that will give foreign governments a say in how America provides access to treatments and cures for seniors and people struggling with devastating diseases,” Ubl said in a statement. “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. 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.”
Michelle McMurry-Heath, the new president and CEO of the Biotechnology Innovation Organization, also condemned the Executive Order. In a brief statement, McMurry-Heath said the organization has worked hard to advance reforms that address affordability and accessibility to life-saving medications. She noted that the “favored nations clause” will hinder innovation in the industry and negatively affect senior citizens who rely on ready access to medications they need.
“This reckless scheme will eliminate hope for vulnerable seniors and other patients waiting for new treatments by drastically reducing investment in cutting-edge scientific research and development. That is why we will use every tool available – including legal action if necessary – to fight this risky foreign price control scheme. America’s patients, families, scientists and researchers deserve nothing less,” McMurry-Heath said in a statement.
In 2019, the U.S. Chamber of Commerce unveiled a study that opposed the idea of tying drugs to the prices paid by other countries. The study predicted dire consequences that could limit options for many patients, including cancer patients.
Last month, the president issued an Executive Order that calls for federal agencies to purchase “essential drugs” and medical supplies that are produced in the United States, rather than from abroad as is the current practice.