President Trump signed an executive order on Sunday to lower certain Medicare drug prices by tying them to prices paid in other developed countries.
“My Most Favored Nation order will ensure that our Country gets the same low price Big Pharma gives to other countries,” the president announced in a tweet during a campaign trip in Nevada. “The days of global freeriding at America’s expense are over and prices are coming down FAST!”
He said the action also will end “all rebates to middlemen, further reducing prices.”
The move has been pending since July when the president held a signing ceremony for four executive orders aimed at lowering drug prices. He said he was delaying the most consequential one, on a “most-favored nation” clause, until Aug. 24 to give the pharmaceutical industry more time to make a deal.
It’s not clear when the government, consumers or drug companies, will notice an impact. Mr. Trump’s order directs Health and Human Services Secretary Alex Azar to “immediately take appropriate steps to implement his rule-making plan to test a payment model” in which Medicare would pay, for some prescription drugs and biological products covered by Medicare Part B, no more than the most-favored-nation price.
Part B covers drugs administered by doctors, though Sunday’s orders also cover pharmacy-counter drugs under Medicare Part D in cases where “insufficient competition exists” — an expansion of how the administration initially conceived the idea.
“It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places,” the president wrote. “High prices cause Americans to divert too much of their scarce resources to pharmaceutical treatments and away from other productive uses. High prices are also a reason many patients skip doses of their medications, take less than the recommended doses, or abandon treatment altogether. The consequences of these behaviors can be severe.”
Conservative pressure groups like FreedomWorks and Americans for Limited Government — who often side with Mr. Trump — are disappointed by the order, saying the White House should stick to free-market solutions to high drug prices instead of mimicking “socialist” price controls elsewhere.
Big Pharma is livid, calling it “unworkable” and a stab in the back as drugmakers work to thwart the COVID-19 pandemic.
“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,” said President and CEO Stephen J. Ubl, president and CEO of Pharmaceutical Research and Manufacturers of America, a major drug-company lobbying group.
“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,” he said. “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.”