Trump issues executive orders aimed at lowering drug prices

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Trump issues executive orders aimed at lowering drug prices

By Sandra Levy - 07/27/2020

President Trump on Friday issued four executive orders broadly focused on lowering drug prices for Americans.

 “The four orders that I’m signing today will completely restructure the prescription drug market, in terms of pricing and everything else, to make these medications affordable and accessible for all Americans," Trump said in remarks following the signing of the orders. "The first order will require federal community health centers to pass the giant discounts they receive from drug companies on insulin and EpiPens directly to their patients."

In one of the orders, Trump said that one of the reasons pharmaceutical drug prices in the United States are so high is "because of the complex mix of payers and negotiators that often separates the consumer from the manufacturer in the drug-purchasing process."  

“The result is that the prices patients see at the point-of-sale do not reflect the prices that the patient’s insurance companies, and middlemen hired by the insurance companies, actually pay for drugs.  Instead, these middlemen — health plan sponsors and pharmacy benefit managers — negotiate significant discounts off of the list prices, sometimes up to 50% of the cost of the drug," Trump said in his comments on the move. " Medicare patients, whose cost-sharing is typically based on list prices, pay more than they should for drugs while the middlemen collect large 'rebate' checks.  These rebates are the functional equivalent of kickbacks and erode savings that could otherwise go to the Medicare patients taking those drugs. Yet currently, federal regulations create a safe harbor for such discounts and preclude treating them as kickbacks under the law."

Fixing this problem could save Medicare patients billions of dollars, Trump said, noting that the Office of the Inspector General at the Department of Health and Human Services has found that patients in the catastrophic phase of the Medicare Part D program saw their out-of-pocket costs for high-price drugs increase by 47% from 2010 to 2015, from $175 per month to $257 per month. 

"Narrowing the safe harbor for these discounts under the anti-kickback statute will allow tens of billions in dollars of rebates on prescription drugs in the Medicare Part D program to go directly to patients, saving many patients hundreds or thousands of dollars per year at the pharmacy counter," Trump said. 

Beyond restructuring the market in terms of pricing, Trump's orders also permits drug importation from Canada. “We will finally allow the safe and legal importation of prescription drugs from Canada and other countries where the price for the identical drug is incredibly lower,” he said.

Reacting to the President's actions, National Community Pharmacists Association CEO Doug Hoey said that independent pharmacies are encouraged by President Trump’s "last-minute decision to revive last year’s proposed rebate rule as part of his package of executive orders on drug pricing."

“After talking with the White House late last Friday, we are encouraged by the President’s focus on PBMs and their shady practices when it comes to rebates," Hoey said. "He clearly understands that the current system is murky and inefficient, allowing PBMs to deal secretly with insurance plans and drug companies to mask the true cost of prescription drugs. He did not mention pharmacy DIR fees specifically, but we are hopeful that the administration will deal with this shell game in the rule-making process."

Hoey went on to say that it is important to note that the agencies must now take his broad directives and turn them into regulations.

"This provides NCPA with an excellent chance to deal once and for all with pharmacy DIR fees. We will continue to advocate with the agencies to eliminate these unfair, unsustainable fees, which CMS admits rose 45,000 % in recent years," he said. "DIR fees are driving small business independent pharmacies out of business, and they are driving up the cost of prescription drugs with sharply higher out-of-pocket costs for patients. If the president’s goal is to reduce prescription drug costs for Americans, then pharmacy DIR fees must be eliminated. That’s our goal, and it should be his goal."

The Pharmaceutical Care Management Association, which represents the PBM industry, was less than thrilled with the executive orders, arguing that the executive orders will have an adverse effect on patients and their out-of-pocket costs. 

“The administration’s decision last year to withdraw a proposed regulation on prescription drug rebates was the right decision. Reviving a rebate reform proposal now does not address the underlying flaws — that it will drastically increase Medicare premiums for America’s seniors and most vulnerable," said JC Scott, president and CEO of PCMA. "This policy does nothing to address drug prices, it only serves to create uncertainty and raise premiums for seniors while imposing nearly $400 billion in additional taxpayer costs, all at a time when taxpayers are already footing additional costs to counter the pandemic and the national debt is at record levels."

Pharmaceutical Research and Manufacturers of America president and CEO Stephen Ubl similarly disapproved of the moves. “In his 2020 State of the Union Address, President Trump declared that ‘we will never let socialism destroy American health care.’ Yet, in the middle of a global pandemic, when nearly 145,000 Americans have lost their lives and millions of others have suffered untold economic hardships, this administration has decided to pursue a radical and dangerous policy to set prices based on rates paid in countries that he has labeled as socialist, which will harm patients today and into the future. ...The president’s attempt to open our country up to socialized health care sets America, our economic recovery and scientific progress back at a time when we need them most.”