President Trump's latest EO on drug prices: What's changing?
At first glance, the order seems to take sweeping steps toward reform, but does any of it really represent a departure from existing law?
On September 13, the White House issued an executive order titled “Executive Order on Lowering Drug Prices by Putting America First.” This is the latest of several executive orders aimed at prescription drug prices, including “Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen,” “Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen,” and “Executive Order on Access to Affordable Life-saving Medications,” all issued on July 24, 2020.
Related: Trump signs new executive order on drug prices
Of these earlier orders, we have seen “Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen” giving rise to the most questions so far. At first glance, the order seemed to take sweeping steps to facilitate the importation of prescription drugs, but does any of it really represent a departure from existing law? The order specifically orders the Secretary of HHS to take action in three ways:
- Facilitate waivers to individuals against the prohibition on importation, “provided such importation poses no additional risk to public safety,” pursuant to section 804(j)(2) of the Federal Food, Drug, and Cosmetic Act (FDCA);
- Authorize the re-importation of insulin products upon a finding that doing so is required for emergency care; and
- Complete the rulemaking process started by the proposed rule (more information below) to allow importation of certain drugs from Canada.
As it relates to the first item, it’s clear that this does not represent any new law or authority. This order is simply an instruction to the Secretary to utilize existing authority, and it is not clear how or whether these waivers would differ from the existing FDA policy of enforcement discretion, which is quite broad and under which individuals are rarely prosecuted for importing prescription drugs for personal use.
The important caveat that the importation must pose “no additional risk to public safety” suggests that there may be no real change at all, as this is one of the main factors in the FDA’s existing policy, and the key element cited by the FDA and pharmacy stakeholders in pushing back against importation.
In regard to the second item, the specific inclusion of insulin is interesting, and perhaps represents the most significant element of this order. The proposed rules outlined in 2019 by the FDA and HHS did not specifically include insulin, and the drug’s special storage and safety requirements are a barrier to its inclusion in existing avenues of importation. Regarding that proposed rule, the third item in the executive order is nothing more than an instruction to continue that rulemaking process.
Unfortunately, it’s still too early to tell whether this order is a real step toward some meaningful development, and we will have to wait and see what HHS does in response. It is worth noting that when the proposed rule came out, it was met with harsh criticism from our northern neighbors, many of whom discussed potential action by the Canadian government to counter any such importation efforts in order to protect their own drug supply. As such, action taken by the United States in regard to Canadian drug importation won’t be the only factor in whether the practice ultimately becomes both legal and practical.
This brings us to the order issued on September 13. In a tweet accompanying its release, the President claimed to have “ended all rebates to middlemen, further reducing prices,” however the order itself doesn’t discuss rebates. Rather, the order seems to relate only to Medicare coverage. It directs the Secretary to take rulemaking action to “test 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.” What this means is that Medicare would cap its payment for a drug at the lowest amount charged by the manufacturer to any other country.
If we ever see implementing regulations, this would be a major development for pharmacies and the Medicare program itself (and the federal government as a payor), but it’s difficult to imagine how it could help non-Medicare health plans. The most obvious response for providers suddenly receiving dramatically reduced payments from Medicare would be to shift that expense onto other payers, which could actually lead to an increase in prices for many payers.
It also remains to be seen what would be included within the “certain high-cost” drugs mentioned and what sort of duration this “test” program would have, so once again, the next steps for health plans and other stakeholders must unfortunately be to just wait and see what happens.
Andrew Silverio, Esq., is Compliance & Oversight Counsel for the Phia Group, LLC, primary focusing is on the most complex and emerging legal and regulatory issues, both internally and for our clients as a member of Phia Group Consulting. Andrew is also the Phia Group’s HIPAA privacy officer.
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