President Trump Unveils Rules to Lower U.S. Prescription Drug Prices

WASHINGTON, D.C., The United States – On Friday afternoon, U.S. President Donald Trump unveiled two rules that would link U.S. prescription drug prices to those found abroad in economically similar countries and end rebates for pharmacy benefit managers (PBMs), saving American patients, particularly Medicare beneficiaries, “many, many billions of dollars every single year,” said Trump.

These rules are set to take effect in January 2021.

Most Favored Nations Rules Say U.S. Will Pay Lowest Price

The first rule, “Most Favored Nations (MFN),” stipulates that the U.S. will pay the lowest price among other developed nations, reiterating initial details from the plan from September of this year.

Essentially, the price would match the lowest price paid among other wealthy nations that are part of the Organization for Economic Co-operation and Development (OECD). This list of countries includes Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, and the United Kingdom.

By paying the lowest price for prescription drugs among these countries, Trump expects Americans to save between 50% and 80% on their prescriptions.

When Trump first signed the MFN Executive Order (EO) in September, Secretary of Health and Human Services (HHS) Alex Azar was directed to immediately take the steps to implement the plan by testing a payment model pursuant to which Medicare would pay, for certain high-cost prescription drugs and biological products covered by Medicare Part B, no more than the most-favored-nation price.

In addition, HHS Secretary Azar was instructed to implement a payment model pursuant to which Medicare would pay, for Part D prescription drugs or biological products where insufficient competition exists and seniors are faced with prices above those in OECD member countries that have a comparable per-capita gross domestic product to the United States, after adjusting for volume and differences in national gross domestic product, no more than the MFN price, to the extent feasible.

No More Rebates for PBMs, Unapproved Drug Initiative Ends

Trump also announced an end to PBMs receiving discounts offered by pharmaceutical companies. According to Trump, these middlemen have been “ripping off” Medicare beneficiaries. From now on, these discounts will be passed on directly to patients at the pharmacy counter.

“This will save patients up to 30 percent,” said Trump. “It could be 40 percent, could be 50 percent, could be much higher than that.”

In addition to these two rules, the Trump administration is ending the “Unapproved Drugs Initiative,” an “unfair practice” that Trump stated has allowed pharmaceutical companies to obtain market exclusivity on generics that have been used for quite some time to jack up prices. Further, Trump added that this policy has led to drug shortages.

Trump’s EOs Received Negative Backlash from Industry

In the summer, Trump signed four EOs to cut prescription drug prices in the U.S., which included the MFN rule as well as passing on savings for insulins and epinephrine through the 340B program to patients, ending kickbacks, and allowing the importation of certain prescription drugs, including re-importation of insulin, from Canada.

With linking U.S. prescription drug prices to those paid abroad, previous efforts to adjust U.S. policy in this regard were never given a deadline.

The Notice for Proposed Rulemaking (NPRM) for the original international pricing index (IPI) model was supposed to take effect in August 2019, and would have been a radical policy change for the U.S. As Trump’s first term in office comes to a close, the President has made a final effort to roll out his promised plans to cut drug prices for Americans, a major cornerstone of his campaign.

However, Trump’s plans have consistently received backlash from industry stakeholders.

This past week, Citizens Against Government Waste published a report on the impact of Trump’s MFN proposal on the future of the biopharmaceutical research committee, concluding, “While that may sound like a good proposal to help reduce drug costs, it is not.” According to Citizens, adopting such a policy would be a major impediment to innovation in the U.S., clearing the pathway for other countries, like China, to overtake the States in the field.

In his speech, Trump noted, “But they’ll — there’ll never be anything like this. I just hope they keep it. I hope they have the courage to keep it…” Whether Trump was referring to the Courts or President-Elect Joseph R. Biden is unclear.

As it stands, Biden has promised to rein in “runaway” drug prices, showing support for leveraging the negotiating power of Medicare when determining drug prices, and as detailed on his campaign website, for previous legislative efforts to benchmark drug prices against those found in economically similar countries around the world.

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