What to expect from President Trump’s recent executive orders on drug prices

• President Trump announced on July 24 four executive orders aimed at reducing patient/consumer spending on outpatient drugs.
• Given the timing of these orders, none will have enabling regulation in effect by election day.
• So many in Washington, D.C., interpret this as more about the optics of “doing something” to control drug costs as opposed to actually controlling drug costs.

On July 24, President Trump announced four executive orders aimed at reducing patient/consumer spending on outpatient drugs. Given the timing of these orders, none will have enabling regulation in effect by election day. So many in Washington, D.C., interpret this as more about the optics of “doing something” to control drug costs as opposed to actually controlling drug costs. The executive orders cover:

1. Increase drug importation: The Secretary of Health and Human Services shall, as appropriate and consistent with applicable law, take action to expand safe access to lower-cost imported prescription drugs by:

• Waiving the prohibition on importing prescription drugs, provided such importation poses no additional risk to public safety and results in lower costs to American patients.
• Authorizing the re-importation of insulin products upon a finding by the Secretary that it is required for emergency medical care.
• Completing the rulemaking process to allow importation of certain prescription drugs from Canada.

2. Redirect drug rebates to patients: The Secretary of Health and Human Services shall complete the rulemaking process he commenced seeking to:

• Exclude from safe harbor protections under the anti-kickback statute certain retrospective reductions in price that are not applied at the point-of-sale or other remuneration that drug manufacturers provide to health plan sponsors, pharmacies or PBMs in operating the Medicare Part D program.
• Establish new safe harbors that would permit health plan sponsors, pharmacies and PBMs to apply discounts at the patient’s point-of-sale in order to lower the patient’s out-of-pocket costs, and that would permit the use of certain bona fide PBM service fees.

3. Require FQHCs to pass 340B savings for insulin and EpiPens to patients: The Secretary of Health and Human Services ensures future grants available under to FQHCs are conditioned on them having established practices to make insulin and injectable epinephrine available at the discounted price paid by the FQHC grantee or sub-grantee under the 340B Prescription Drug Program (plus a minimal administration fee) to individuals with low incomes who are either uninsured or have high cost sharing.

Takeaway

Even critics of the 340B program were taken aback by this one. While policies vary from clinic to clinic, most FQHCs are already providing their patients, particularly those who are low income, with deeply discounted or free outpatient drugs, including those covered under the executive order. So, it’s questionable how much this will actually save patients.

4. Implement “Most Favored Nation pricing” for separately payable Part B drugs: The broad outline of this executive order would reduce the price Medicare would pay for separately payable Part B drugs to the lowest price paid by other comparable countries. This, allegedly,  is a more aggressive version of a policy floated in the international pricing index advanced notice of proposed rule-making in late 2018. It’s likely the administration could issue a proposed rule on this sooner rather than later. A proposed “International Pricing Index Model for Medicare Part B Drugs” has been under review at the Office of Management and Budget since June of 2019 so the rule (or substantial portions of it) may already be drafted.

Takeaway

The administration is holding the text of this Executive Order (EO) until August 24 to give the pharmaceutical industry an opportunity to propose an alternative that would lower costs for the Part B program. To say they’re not eager to engage is an understatement. The President attempted to schedule a sit-down with industry executives on July 28, however, none of the invited companies offered to send a representative.

The EO faces long odds of actually becoming an enforced policy. It will face significant opposition from three of the most influential lobbies in Washington, D.C. (particularly specialist societies that administer high volumes of separately payable Part B Drugs: oncology, ophthalmology, rheumatology). And it will also likely face opposition from a large portion, if not all of Congressional Republicans, given the model would administratively set prices instead of the current market-based mechanism.