President Donald Trump announced new policies Friday aimed at lowering prescription drug prices under Medicare by linking them to rates paid in other countries and allowing Americans to buy medication imported from Canada.
The changes are included in executive orders that come as Trump seeks to repair his standing on health-care issues, particularly with senior voters. Polls have shown sentiment is souring over his handling of the coronavirus pandemic and efforts to eliminate the Affordable Care Act without having a ready replacement.
Related: How states could take the lead on drug price reform
The president also announced a new policy to require federally qualified health centers to pass discounts they receive on insulin and EpiPens directly to their patients, and a drug rebate rule that removes legal shields for reimbursements paid by drugmakers to middlemen and insurers.
The orders “represent the most far-reaching prescription drug reforms ever issued by a president,” Trump said at an event in Washington. They will “completely restructure” the prescription-drug market, he said.
Democrats and drugmakers quickly pushed back. House Speaker Nancy Pelosi said the moves “take no real action” to lower prices and will put Medicare beneficiaries at risk of higher premiums. Industry lobbyist Stephen Ubl, head of the Pharmaceutical Research and Manufacturers of America, called the pricing policy “radical and dangerous.”
The order tying prescription-drug prices to international benchmarks, which Trump described as the “most favored nations” clause, won’t go into effect until Aug. 24 to give drugmakers time to come up with alternative measures for lowering costs, Trump said. Several top pharmaceutical companies have requested a meeting on the issue, which will be held on Tuesday.
$17 billion savingsThe international drug price rule is the only policy backed by the administration that would boost the government’s ability to decide what it will pay for medications. Health officials estimate the policy change proposed by Trump will save Medicare $17 billion in the first five years. In 2018, Medicare spent $335 billion on prescription drugs, a 2.5% rise from the previous year.
“We pay for all of the resources and all of the development and foreign countries pay absolutely nothing,” Trump said. “Americans are funding the enormous cost of drug resource for the entire planet.”
Trump’s plan to import cheaper drugs from Canada is less likely to be effective. Canada’s pharmaceutical market is likely not big enough to satisfy the U.S. demand for drugs.
Secretary of Health and Human Services Alex Azar said that personal importation of insulin would be allowed, after not allowed last year under the previous importation proposal.
Rebate ruleTrump also revived his drug rebate rule, stripping legal shields for reimbursements paid by drugmakers to middlemen and insurance plans providing coverage through Medicare’s Part D drug program or Medicaid.
Those payments create incentives for higher drug prices, drug companies have argued, because they push companies to raise prices in order to meet discount demands by drug middlemen. Instead of middlemen receiving discounts based on the price of drugs, they’d get a fixed fee under the policy change.
The pharmaceutical industry supported the plan, which was one reason for its initial demise. Trump was also apparently concerned in the past that the policy would raise insurance premiums. Lawmakers criticized the rule for its massive price tag too. It would cost taxpayers $177 billion over a decade, according to the Congressional Budget Office.
Jon Conradi, an outside spokesman for the Campaign for Sustainable Rx Pricing, which represents insurers, pharmacy benefit managers, and hospitals, lambasted Trump for bringing it back to the table.
“A reboot of the Rebate Rule, after the administration’s own admission it would increase premiums on Medicare beneficiaries and cost taxpayers hundreds of billions, would be a stunning cave to Big Pharma at the expense of American seniors and taxpayers,” Conradi said before the executive order was announced.
Discount programThe plan to use the federal drug discount program, known as 340B, for hospitals to get cheaper insulin and EpiPens is also new. The 340B program requires drug companies that want to sell their drugs through state Medicaid plans to offer steep discounts to hospitals that serve primarily low-income patients. The program has grown considerably in the last few years. Continue Reading
To read a copy of the President's Executive Order on 'Eliminating Kickbacks to Middlemen' click here