The White House is moving forward with a plan to dramatically slash drug costs after talks broke down with the pharmaceutical industry’s major lobby.
President Donald Trump tweeted Sunday that he signed a new executive order for a “most favored nations” plan. The president had signed a version of the directive more than a month ago but said he would hold it so industry could come up with an alternative.
The plan would tie payments for certain Medicare drugs to the significantly lower costs the treatments sell for abroad. Trump has touted the effort as a way to fix foreign “free riding” and high costs paid by seniors.
Prices for drugs administered by doctors will be linked to a “most-favored-nation price” drawn from the lowest price among members of the Organization for Economic Cooperation and Development that have a similar per-capita gross domestic product, the executive order states.
The order directs federal health officials to carry out demonstration projects for Medicare Part B, a move that would bypass the monthslong process of rulemaking and could start the price cuts before Election Day.
It also would develop a similar rule for Medicare Part D, or those drugs that patients pick up at the pharmacy counter. The Part D rule would apply to drugs without much competition for which seniors pay prices higher than those in comparable OECD countries.
The White House also considered distributing $100 coupons to Medicare patients, a move that could have been similarly fast-tracked to deliver one-time savings to roughly 25 million people before the election, one lobbyist said. But White House had sparred with Centers for Medicare and Medicaid over the feasibility of the plan.
The pharmaceutical industry and many conservative groups vehemently oppose the most favored nations plan over the way it would effectively import foreign governments’ price controls. An alternative proposed by drug lobby PhRMA last month would lower costs more modestly in Medicare Part B and Part D by giving a “market based discount” on the often pricey physician-administered drugs and installing a cap on patient cost-sharing for pharmacy counter medicines.
Stephen Ubl, president and CEO of PhRMA, called the Trump order a “reckless attack” on companies working on coronavirus treatments, adding it would “will give foreign governments a say in how America provides access to treatments” and threaten U.S. innovation.
Michelle McMurry-Heath, president and CEO of the Biotechnology Innovation Organization, said her trade group “will use every tool available — including legal action if necessary — to fight this risky foreign price control scheme.”
Trump in July gave the drug industry a one-month deadline to come up with an alternative plan. But pharmaceutical companies refused to meet with the president and the deadline passed.
An industry alternative delivered to the White House in late August would have saved the government and seniors significantly less money but could also have been implemented before the election and help Trump deliver on a signature promise in his 2016 campaign.
But talks between PhRMA and the White House broke down last week, according to two lobbyists.
Susannah Luthi and Dan Diamond contributed to this report.
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