Trump signs executive order on lowering drug prices

President Donald Trump signed an executive order earlier this month, choosing to pursue a “most favored nation” policy for drug pricing.

Under the order, the U.S. Department of Health and Human Services (HHS) would test payment models for Medicare Parts B and D in which Medicare would pay for certain drugs not more than the "most favored nation" price, which is defined in the order as “the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.”

The new order follows a similar order signed on July 24, which gave pharmaceutical manufacturers until August 24 to come up with an alternative to the most favored nation scheme. No alternative was presented, resulting in the new order.

Several stakeholders in the industry have criticized the order, including Pharmaceutical Research and Manufacturers of America (PhRMA), which issued a statement calling the order an “irresponsible and unworkable policy,” that puts seniors and patients with chronic conditions at risk, and allows politicians and foreign governments to “arbitrarily decide what medicines are worth and what diseases are worth investing in.”

“The focus of any reforms must be on lowering costs for patients, ensuring patients’ access to medicines, addressing the misaligned incentives in the pharmaceutical supply chain, and protecting the critical work being done to end [the novel coronavirus (COVID-19)],” said Stephen Ubl, president and chief executive officer of PhRMA, in the statement. “Unfortunately, instead of pursuing these reforms, the White House has doubled down on a reckless attack on the very companies working around the clock to beat COVID-19. We must not gamble on America’s need for continued medical progress, for a strong U.S. economy, or on our ability to win the fight against the COVID-19 pandemic.”