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Analysis

Drug Lobby Rips Trump's 'Most Favored Nation' Mandate on Medicare Drug Prices

By John Commins  
   September 14, 2020

PhRMA says the White House has "doubled down on a reckless attack on the very companies working around the clock to beat COVID-19."

Drug makers are irate and threatening legal action in the wake of President Donald J. Trump's executive order mandating that Medicare Part B and Part D pay no more than other developed nations for prescription drugs.

The so-called "Most Favored Nation Policy", which Trump signed on Sunday, is one of a handful of executive orders issued this summer to address the nation's spiraling drug costs, which are the highest in the world.

The executive order notes that other developed nations, often the single, biggest purchaser of drugs in their respective countries, use their buying power to negotiate cheaper prices, " leaving Americans to make up the difference — effectively subsidizing innovation and lower-cost drugs for the rest of the world."

"Americans pay more per capita for prescription drugs than residents of any other developed country in the world," the order reads. "It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places."

Specifically, the executive order directs Department of Health and Human Services Secretary Alex Azar to draft rulemaking to test a payment model for high-cost Part B drugs, and for high-cost Part D drugs with insufficient competition.

Trump has said his executive orders will reduce prescription drug costs by as much as 70%, though that assertion has been challenged by independent analysis.

Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, accused the Trump administration of pursuing "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."

"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," Ubl said.

That sentiment was shared by Michelle McMurry-Heath, MD, president and CEO of the Biotechnology Innovation Organization, who called the mandate "dumbfounding."

"This reckless scheme will eliminate hope for vulnerable seniors and other patients waiting for new treatments by drastically reducing investment in cutting-edge scientific research and development," she said. "That is why we will use every tool available – including legal action if necessary – to fight this risky foreign price control scheme."

It's not clear when the executive order would take effect, but with less than 50 days until Election Day, Avalere consultants Principal Matt Kazan said it's "unlikely any policy change will be implemented before votes are cast."

"With that said, you could imagine a scenario where Part B reforms are effective before Inauguration Day. Part D changes, however, will likely need to wait until the 2022 plan year," 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.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The "Most Favored Nation Policy" is one of a handful of executive orders issued this summer to address the nation's spiraling drug costs.

Trump has said his executive orders will cut drug costs by up to 70%, although that claim has been challenged by independent analysis. 

Pharmaceutical industry leaders are calling the executive order "irresponsible", "unworkable", and "dumbfounding".


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