WASHINGTON — The Trump administration unveiled four executive orders on Friday aimed at bringing down pharmaceutical prices, a last-ditch effort by the White House to cut drug costs before the November election.
It remains unclear whether the Trump administration is capable of finalizing many of the actions by Election Day — and whether it intends to do so.
Trump backed away Friday from implementing a sweeping policy that would revive a long-stalled plan to cap U.S. drug prices based on what drug makers charge in foreign countries. Instead, he announced a one-month ultimatum for drug manufacturers to propose alternative plans to reduce drug prices.
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“We’re going to hold that until August 24, hoping that the pharmaceutical companies will come up with something that will substantially reduce drug prices,” Trump said. “The clock starts right now.”
A second order issued Friday revives a previously abandoned plan that would eliminate the rebates drug makers pay to insurers. But it remains to be seen if the rebate rule will ever truly be implemented: The executive order released by White House includes a caveat that the plan cannot be implemented if it will raise premiums. The government’s own actuaries have estimated that the rebate rule would increase premiums by up to 25 percent.
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It does appear, however, that the Trump administration is expanding its efforts to allow Americans to import medicines. Health Secretary Alex Azar told reporters Friday that the administration was now allowing personal importation, a phrase used to describe when individual consumers buy drugs from other countries. The executive order on importation appears to back up Azar’s comments. The order says HHS will facilitate “grants to individuals of waivers of the prohibition of importation of prescription drugs.”
The fourth order would force certain health centers to pass negotiated discounts on insulin and EpiPens to patients.
It’s unclear whether the effort to make progress on drug pricing will pay off, given that Trump can’t immediately enact any of the policies. Rather, the orders direct his administration to begin the normal, notoriously slow regulatory processes needed to reform the existing system. The administration will have to speed through that process to formalize any of the policies before November.
Azar, however, supplied little detail as to the timetable for implementing Trump’s announcements and how the administration would proceed.
“Today’s executive order makes clear that these are the policies of this administration,” Azar said. “These will happen; [Trump] has ordered them to happen.”
Even if the administration is successful in finalizing any of its plans before the election, they’re all likely to be challenged in court. The drug industry has already warned the Trump administration that they believe both the administration’s original importation plan and its international pricing plan are unconstitutional.
The industry will have an opportunity to respond directly to the plans next week. Trump announced he would welcome a group of pharmaceutical executives to the White House on Tuesday to discuss alternatives to his administration’s proposals, particularly the international pricing scheme.
Industry leaders rushed to condemn the international pricing scheme and argued it could threaten companies working to address the Covid-19 pandemic, even as some expressed support for the rebate rule.
“Adopting foreign price controls by executive fiat will cripple the small, innovative companies developing the vaccines and therapies that will help end this pandemic and get the American people back to work,” Michelle McMurray-Heath, the CEO of the biotechnology trade group BIO, said in a statement.
The White House did not release the text of its international pricing rule, but clarified in a statement that it applies to Medicare Part B drugs, or those administered in doctors’ offices or hospitals. Instead of capping prices based on the average price paid in a set of developed countries, the administration said Medicare would not pay more than any “economically comparable” country in the OECD, an international organization with 37 member states. While most OECD countries are seen as economically developed, the administration did not specify which countries would be used to establish pricing benchmarks.
Industry-aligned advocacy groups quickly maligned the plans, which they insisted would import “discriminatory metrics” used in other countries to manage drug prices, “while doing little to help Medicare beneficiaries with their costs.”
Former Rep. Tony Coelho, a former Democratic congressman from California who now chairs the Partnership to Improve Patient Care, a coalition of patient and drug industry groups, called the move “not only pointless, but potentially dangerous.”
Many of the ideas Trump highlighted have languished for years at the Department of Health and Human Services. The Trump administration’s importation plan was originally released in July 2019, while the international pricing plan was initially proposed in October 2018. The administration originally promised the program would be up and running by the spring of 2020.
It gained little ground, given widespread opposition from Trump’s own party. The idea has drawn widespread criticism from nearly every health care sector. The drug industry said the plan amounts to price controls that would keep new medicines out of the hands of U.S. patients. Hospitals warned it “could greatly increase their regulatory and operational burden and costs.” Even MedPAC, the congressional Medicare advisors, warned that the proposal would be exceedingly difficult to implement.
It’s also unclear how Trump’s embrace of the rebate plan will play with voters in November. The plan has been maligned by Democrats, as well as advocacy groups — including AARP and the Campaign for Sustainable Rx Pricing — as a giveaway to the drug industry. The rule has long been seen as a centerpiece of Trump’s drug pricing agenda, but has been controversial since its inception.
Drug manufacturers and their allies have complained for years that they are negotiating larger and larger rebates with insurers, but those savings aren’t being passed on to patients at the pharmacy counter. While drug makers largely support the policy, middlemen, insurers, and advocacy organizations have said it would take away one of the only ways insurers can negotiate with drug makers. Trump, despite his bluster toward drug makers, acknowledged drug makers’ embrace of the rebate rule Friday.
Trump’s latest policy rollout comes after months of polling that show him trailing former vice president Joe Biden nationwide and in most swing states.
Biden’s own platform includes aggressive drug pricing measures that are, in many cases, similar to those Trump included in his announcement on Friday: It would rely on an international reference price to cap U.S. payments for newly developed drugs and allow Americans to buy prescription drugs from other countries.
Broadly, campaign experts view health care as one of Trump’s largest liabilities, due to his administration’s inability to finalize drug pricing and health insurance reforms and, more recently, the federal government’s failed effort to contain Covid-19 within the United States.
A recent Kaiser Family Foundation poll showed Americans trust Biden over Trump on health care issues by a 53-38 margin, and on Covid-19 issues by a 50-41 margin.
During his State of the Union address in February, Trump urged lawmakers to pass a drug pricing bill. But in the months since, as negotiations broke down and Covid-19 discussions came to dominate Congress, it became clear that drug pricing reform in 2020 would only come via executive action, if at all.
In June, several key lawmakers effectively acknowledged that congressional negotiations on a drug pricing package had fully broken down. Sen. Chuck Grassley (R-Iowa), the chairman of the Senate Finance Committee, said Democrats had “left the negotiating” table.
Democrats and progressive groups were similarly unimpressed with Trump’s announcement, casting it as an election-centered ploy unlikely to help Americans save money on prescription medicines.
“Trump’s failed leadership throughout the pandemic crisis has left him searching for anything to change the conversation,” Sen. Ron Wyden (Ore.), the Finance Committee’s top Democrat, said in a statement. “Today’s announcement is more snake oil for Trump to sell on the campaign trail.”
Sen. Mitch McConnell (Ky.), the GOP majority leader, has expressed little interest in advancing a drug pricing package. Republican senators have also warned against that bill’s most controversial provision: Capping drug price increases at the rate of inflation.
Senate Democrats, meanwhile, have advocated for the bill to include provisions that would allow Medicare to directly negotiate the price of some drugs with manufacturers, a centerpiece of the aggressive drug pricing bill that House Democrats passed in late 2019.
“We’ve been waiting for Congress to take action for many decades to reduce drug prices …. I’m unwilling to wait any longer,” Trump said.
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