President Donald Trump signed an executive order Sunday aimed at slashing prescription drug prices by tying the prices Medicare will pay for certain drugs to overseas prices.
The order says the Medicare program should not pay more for Part B drugs, or drugs administered in hospitals or doctors' offices, or Part D prescription drugs, those distributed at pharmacies, than the "most-favored nation" price. It directs Department of Health and Human Services Secretary Alex Azar to begin testing a payment model that ties Medicare spending for certain drugs to the lowest price paid by a comparably developed nation.
The international price referencing model would also need to test whether the policy resulted in better outcomes and lower prices, the order says.
The move comes less than two months after Trump also signed several executive orders intended to lower drug prices and resurrect measures to constrict Medicare rebates, lower insulin prices and allow the importation of drugs from Canada.
While Trump signed a version of this directive in July, he said he would hold it so industry could come up with an alternative. Fierce Pharma reported that Trump said he would meet with drug industry execs to negotiate ways to reduce drug prices, but industry execs said they were unaware of such a meeting.
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The idea of referencing pricing has been strongly opposed by drug companies and drew a sharp response from Pharmaceutical Research and Manufacturers of America (PhRMA), one of the industry's lead lobbying organizations.
“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 PhRMA President and CEO Stephen Ubl.
"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," Ubl 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."
Some advocacy groups have also opposed the idea, with the National Taxpayers Union and Partnership to Improve Patient Care (PIPC) releasing statements on Sunday that said the order could result in patients being unable to get drugs.