White House issues executive orders taking aim at drug prices

WRITTEN BY: Todd Boudreaux

In a press conference held on Friday, July 24 President Trump announced and signed four Executive Orders aimed at lowering prescription drug prices in the United States.
An Executive Order is an operational directive signed by the President to guide the Executive branch of the federal government. It does not need to be voted upon by Congress, but Congress may create a law that nullifies an Executive Order.
Notably, Executive Orders involving regulatory change do not go into effect immediately. The signing of these bills means that his administration now needs to go through the regulatory process of reforming the current system to implement these orders. That is unlikely to happen before November’s election, and if any of the policies are enacted during this term, they would likely face court challenges as well.

What are the new orders that were signed and what do they do for drug pricing?

Executive Order #1 – “Allow Importation” – State, wholesalers and pharmacies will be permitted to safely and legally import prescription drugs from Canada and other countries where the price is lower.

Americans pay among the highest prices for prescription drugs in the world. People with diabetes in the United States sometimes resort to crossing the border into Canada (or elsewhere) to obtain insulin, something the president made specific reference to in his reasoning for this order. If it were possible to import insulin and pay foreign prices, this could be a significant cost-saving measure for many.

Of special note, this Executive Order requires, under Section 2(b), the Secretary of Health and Human Services to deem that the re-importation of insulin is required for “emergency medical care” and does not pose a public safety risk.

Executive Order #2 – “More Affordable Insulin/ Epipens” – This order will require Federal Community Health Centers to pass discounts they receive on insulin and epipens to their patients.

Federally Qualified Health Centers (FQHCs) currently receive heavily discounted prices on certain drugs from manufacturers under the 340B Drug Pricing Program, which provides primary care health services in underserved areas as defined in Section 1905(l)(2)(B) of the Social Security Act. Were this Executive Order to become finalized and go into effect, people who receive care through these centers could see significant reductions in the cost of their insulin, though still likely more than Trump’s claim of “pennies a day.”

Executive Order #3 – “Rebate Rule” – This order takes aim at what Trump referred to as the “middlemen and middlewomen” of drug pricing in the United States – the Pharmacy Benefit Managers. This Order states that rebates previously received by the PBMs will be passed on to the patient.

The complex system of insulin pricing in the U.S. has many players, including PBMs who are often referred to as middlemen, negotiating drug prices between payers and manufacturers. Targeting the system of rebates paid to PBMs has long been at the center of Trump’s drug-pricing reform policy, formally announcing plans in early 2019 to take on the issue. In July of that same year however, the administration dropped those plans due to the potential of increases in Medicare Part D premiums, as rebates offer heavy subsidies to the plans. Many thought that would be the end of it, making today’s third executive order surprising. While the EO states that discounts should be passed to the patients, it will require significant restructuring of the Medicare Part D system.

Executive Order #4 – “Most Favored Nation (MFN)” – This order would require Medicare to purchase drugs from manufacturers at the same price that other countries pay, using the International Price Index (IPI) Model. This would only affect those under federal insurance plans, not the majority of Americans living with diabetes on commercial insurance plans.

The announcement of this order also came with a one-month ultimatum of sorts for drug manufacturers. Trump said that implementation will be held until August 24th at 12:00pm EDT to give manufacturers time to offer alternative solutions. The president also announced that drug manufacturers will be in the White House on Tuesday July 28 to further discuss the issue. This ticking clock is likely the reason that the 4th EO has not been posted to whitehouse.gov.

What does this mean for people with diabetes?

If any of these executive orders are enacted, each would have a specific impact on the cost of insulin for a segment of people in the United States.

Unfortunately, each executive order also comes with it’s own unique set of hurdles. Importing drugs from foreign countries requires FDA approval, and cooperation from the countries of export as well. A statement from the Canadian Government on Trump’s announcement is expected soon, however in December of 2019, Health Canada spokesperson Alexander Cohen said: “Our government will protect our supply of and access to medication that Canadians rely on.” Last summer the governor of Florida, Ron DeSantis signed a bill into law that sought to allow the state to import drugs at lower costs from Canada. One year later, and the law has yet to be approved by the FDA. DeSantis spoke at the press conference today, praising the president’s Executive Orders.

Indeed, many of the proposals signed into Executive Orders have existed in some form prior, and have been held up for various reasons for years. According to STAT news, “The Trump administration’s importation plan was originally released in July 2019, while the international pricing plan was initially proposed in October 2018. The administration originally promised the program would be up and running by the spring of 2020.”

The pressure to reform drug pricing in the United States, including insulin, remains high. Campaign promises of the 2016 election to control healthcare costs including drug pricing are far from fulfilled. Whether these Executive Orders will be followed up with changes necessary to bring down drug costs remains to be seen.

5 Likes

OK, that kinda helps explain. It still seems quite complicated. Oh well, its a goal. They are gonna take a swing. We’ll see what happens.

My guess @mohe0001 is that the executive orders are not altruistic , but rather a political ploy to garner votes. Time will tell.

2 Likes

It’s a start, hopefully a start that goes somewhere. You have to chop at our system because our system is so messed up. So any changes are a start.

Just opening the fact that it’s okay to buy from other countries hopefully opens the door for various companies or groups to purchase from other countries which pay much cheaper prices. Once you have the competition of a cheaper price hopefully it will bring down the prices here and start to change some of our very messed up system of prescription drugs, rebates, kick backs while the consumer is the only one that gets nailed with full retail prices.

Hopefully a start.

1 Like

Your not the first person I’ve heard say that, El_Ver. This is stuff he would have to work on in 2nd term. There’s not enough time left. But, a lot of this stuff are issues that we have been raising and working on for years, so it is kinda exciting to see it leap up to the top of the totem pole (I don’t have a good metaphor this morning). Some (not all) of this stuff is in play already, here. ADA and Mayo and MN are working on it. Its just getting national attention.

I never actually believe any of this stuff is gonna ‘fix’ healthcare. Its become a sport to swing bat at the system - an exciting sport. Its fun! Its extra special fun when they make pharma show up to the game. You should have been there when they made the PBMs come into committee in MN. It was a witch burning. If people had garbage, the audience would have thrown it at her. I might have booo-ed when she said something. It was like a freaky-deaky, old fashioned carnival. It was the best ticket in town.

I like how Marie frames the issue. I wish the prez didn’t go after the allies so rudely, like its their fault that they have functioning healthcare. This mess is all our own creation and no one else’s. It’s our lobbyist’s, corporate culture, and lack of medical ethics that broke our medical system. Can’t pin this on France. You can pin it on China, though, to a large degree, but not entirely. We played a role in our own undoing. Prez might be helping pharma save face by blaming the allies. He’s gotta talk to pharma this week.

1 Like

As you mention, about not seeing how we can fix health care, any attempt to fix the system creates pushback from other parts of the same system.

An economics text I read 20 years ago, when I read more in finance, economics, and business, described the cost problem as having three providers, insurers, pharma/device, and hospitals/doctors. Any attempt to control just one part of the system would be ineffective, as the other two raise prices, or make covert deals that nullify any attempts at control. It is like playing whack-a-mole with the medical system, and the only way to control prices would be to engage/legislate all three. Worse, all three are deeply entrenched, powerful blocs, with hospitals only becoming more so in the last few years. The latter are consolidating, buying up practices, cutting care, while simultaneously billing at higher rates since they are more effective at using the system.

In addition to legislating all three, they need to use the buying power of the federal government and Medicare to affect market prices. The providers, both powerful and entrenched will push back, leading to some compromises, a necessity, if there is going to be any change, similar to the ACA.

1 Like

They would also need to pass new laws as loopholes and problems are discovered. The intersection of the ACA’s Medical Loss Ratio with pharma created the pbm rebate issue which essentially results in an increase in cost of drugs to the consumer (only those that require drugs) while allowing the insurer a rebate that keeps the premium low and MLR on target. This results in overall unnecessary increases in administration costs (wrapped into the cost of drugs passed along to consumers in plans with coinsurance and deductibles) and further exacerbates the pharma monopolies.

Passing legislation and then leaving it as is for 10 years is never going to work.

1 Like

Where I get super frustrated and just throw up my hands, is when those separate, distinct entities you list are actually controlled by one another - like, when the insurance company owns the hospital.

That’s the moment where it creates an infinite loop of confusion that makes me freak out.

@katers87, I think any change requires an awful lot of re-writing of the laws. The insurance company makes a lot of laws. Thats where things get super time consuming. Its really hard to change laws. I just don’t know what were gonna do, maybe we just need to succeed and start a new country from scratch. Might be easier.

I imagine the executive orders are actually toothless and easy for industry players to avoid, ultimately it is up to the administration to effectively implement it. That said, another idea that might help, in the absence of national health coverage and healthy legislation…

1 Like

If the Donald is re-elected in November - and that is a REALLY big IF - don’t wait for these measures to be implemented. Once they have served their short term purpose i.e. garner votes at the presidential election it will be business as usual with the winners both in the White House and Congress taking ongoing bribes from the pharmaceuticals to do their bidding. Anyone who doubts the truth in that is incredibly naive.

2 Likes

We are getting sued by pharma, so it might help if someone higher up can pull some punches. (We are also suing pharma, but that’s been going on for several years, now). S.O.S. might be going up from the states for assistance. Pharmas gonna have trouble squeezing money outta stones, now. Can you imagine federal courts awarding money in court to pharma from the States under current circumstances? There is rage. No one is on board for this after the last recession’s bank payouts.

Things that he mentioned sound familiar. I think he has been talking to our people. He’s been talking to other state governments. State governments have started all this. What we will see if if he can lend some help because it is not all going that smoothly.