Trump finally signs executive order on Medicare drug pricing but will anything change on the ground?

By Max Rex, Consultant

Email: [email protected]

After years of rhetoric about drug pricing, President Trump signed an executive order on Sunday 13th September which aims to introduce international reference pricing for drugs covered by Medicare. This order calls for Medicare to pay no more for drugs than the lowest price that is paid by other developed nations.

A previous version of this “most-favored nations” executive order only covered Medicare Part B, whereas this updated version includes both Part B and Part D (prescription drug coverage). Although administration officials are touting this proposal as potentially reducing drug prices by 60-70%, this is widely disputed. Regardless, millions of patients are covered under Medicare Part B and Part D, so any changes to pricing would have large ramifications.

Similar plans have been proposed in recent years, with the international reference pricing appearing in a proposal from the Trump administration in 2018, and an Act passed by the House of Representatives at the end of 2019. In this instance, it appears President Trump was hoping that the threat of this executive order would spur pharmaceutical companies to agree to price reductions. However, a counterproposal from the PhRMA was not considered acceptable by the administration.

So, what does this mean?

Immediately: Not much. This move will not come into force before the presidential election in early November this year. Orders such as these need to go through many stages of consultation and review before implementation is possible. Despite many promises from the Trump administration to lower prescription drug prices, no significant changes have happened, so the motivation behind this order could be political in the run up to the election.

As with most recent drug pricing proposals, this move is expected to be fought vigorously by the industry. Stephen J. Ubl, President and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), a major pharmaceutical industry group, called the announcement “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”.

There will also be strong pushback from patient organizations to the latest executive order. Since being proposed in 2018, there have been numerous letters signed by huge numbers of patient organizations arguing against these changes, strongly pushing back on the potential for “discriminatory cost-effectiveness standards” used in other countries having an impact on the US market.

This topic will need to be revisited once the outcome of the presidential election is known. Both candidates have advocated for the introduction of some sort of international price referencing, so the industry will have a fight on its hands regardless of the outcome. But the story has stayed the same for the whole of the Trump administration: many bold proposals on how to rein in drug prices, but no actual progress made.

If you would like to know how the executive order could impact your company’s products in the US, please reach out to the P4A team on [email protected]

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