President Donald Trump started a process that could cut some U.S. drug costs by tying prices to those paid by countries with national health systems, a move drugmakers said will stifle innovation.
The order, released on Sunday, came after an earlier attempt to force pharmaceutical companies to make reductions didn’t yield results.
Trump, while on a campaign swing to Nevada, tweeted that he’d signed an order on the “most favored nation” plan, which would try to link Medicare Part B and Part D prices to lower prices paid by other countries. The approach was broader than an initial effort that only targeted Part B.
Just signed a new Executive Order to LOWER DRUG PRICES! My Most Favored Nation order will ensure that our Country gets the same low price Big Pharma gives to other countries. The days of global freeriding at America’s expense are over…
— Donald J. Trump (@realDonaldTrump) September 13, 2020
The order is a first step that instructs the U.S. Department of Health and Human Services (HHS) to begin the rule-making process to test “a payment model” for some medicines. It offered few details.
“The cost of prescription drugs will be dropping like a rock very soon,” Trump said Sunday at a rally in Henderson, Nevada. “The drug companies don’t like me too much.”
The order falls far short of an immediate cut that Trump has touted would lower patients’ out-of-pocket costs. Instead, it starts the process for HHS Secretary Alex Azar to test the impact of such a change. That likely means patients won’t see lower prices until well after the U.S. presidential election in November, if at all, as the path to lowering drug prices remains uncertain.
In late July, Trump announced plans for multiple executive orders, including one that would allow Americans to buy medication imported from Canada. The president announced the “favored nations order” at the same conference in an attempt to pressure drug companies to the table to strike a deal.
The White House released that July 24 order on Sunday, but also announced that it had been rescinded. The new order issued Sunday echoes the earlier order’s provision on Part B, which refers to the Medicare plan that encompasses therapies administered in a doctor’s office or hospital, but adds a section on Part D, the prescription drug benefit.
If Trump ultimately benchmarks prices to those of countries with universal health care systems, it could slash drug company revenues.
“With scientists and researchers at America’s biopharmaceutical companies working around the clock to fight a deadly pandemic, it is simply dumbfounding that the Trump administration would move forward with its threat to import foreign price controls and the inevitable delays to innovation that will follow,” Biotechnology Innovation Organization CEO Michelle McMurry-Heath said in a statement. “We will use every tool available — including legal action if necessary — to fight this risky foreign price control scheme.”
Stephen Ubl, chief executive officer of the drug industry’s largest trade organization, called the White House approach “irresponsible and unworkable.”
“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,” said Ubl, head of the Pharmaceutical Research and Manufacturers of America.
And the U.S. Chamber of Commerce, typically a reliable backer of Republicans, said in a statement that Trump’s “flawed and dangerous policy” was coming at “the worst possible time.”
“The U.S. Chamber is assessing options to challenge this misguided policy,” said Neil Brady, the organization’s chief policy officer.
The planned order drew ire from the drug industry when it was broached in July. Pharmaceutical groups ran advertisements against the measure, as Trump began touting the as-of-yet-unspecified policy at campaign rallies.
Trump said at the time that he would give the industry 30 days to aid him in finding an alternative solution to cut drug costs, and was open to meet with those in the sector to find a compromise. No agreement was announced.
Former Republican representative and longtime industry lobbyist James Greenwood has suggested Trump’s “most favored nations” order contradicts his other political positions. “The president rails against socialist medicine, but he’s willing to import socialist pricing models into the United States,” Greenwood told Bloomberg in February, as the Trump administration began developing the plan.
Democrats have also raised concerns. House Speaker Nancy Pelosi said the moves took “no real action” to lower prices.
Trump has sought to improve his standing on health-care issues, particularly with older voters, as negative sentiment over his handling of the coronavirus has mounted.
Research from the data firm 0ptimus found has found the pandemic has activated a new group of “Coronavoters” who pose a threat to his presidency: Republicans for whom the virus was the last straw, and “low-propensity” Democratic and independent voters who will mobilize to the polls come November.
— Read Trump Rule to Put Prices in Drug Ads Is Shot Down by Judge, on ThinkAdvisor.