NEWLY UPDATED: Trump Pushes Ahead with Proposal to Lower Drug Prices for Medicare Beneficiaries

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This article was updated on November 24, 2020. 

With two months left in the oval office, President Donald Trump continues to push for lower prescription drug costs. This Friday, November 27, he is expected to announce two new rules in effort to lower drug costs. Friday is the last day that the administration can release a rule that could be finalized in the 60 days before President-elect Joe Biden assumes office.

The U.S. has been experiencing exorbitant drug prices over the past several years, to the point where many are going without or rationing life-saving drugs. Change has been much-needed. Is the Trump administration’s new move too little too late, or will it make a difference in drug prices?

The upcoming rules

The first rule, the “most favored nation,” would require Medicare to tie the prices it pays for drugs to those paid by other wealthy countries. The plan would lower Medicare payments for 50 costly medicines administered in the doctor’s office, such as expensive therapies for cancer and rheumatoid arthritis based on a “blending formula” that includes the lowest adjusted international price for the product between a group of OECD countries with similar GDPs to the United States. 

The policy would accept some providers, including hospitals for children, cancer patients and critical care, plus rural health clinics, federally qualified health centers, and Indian Health Service facilities.

Trump also announced a plan to eliminate rebates that drugmakers point to when justifying soaring drug costs.The second ruling would limit rebates paid to middlemen in Medicare. The administration has said that the “savings for patients may be nearly 30 percent” under the new plan to eliminate rebates that pharmaceutical companies pay to pharmacy benefit managers. This rebate plan is estimated to cost up to $196 billion in government spending over the next decade.

It remains unclear whether the Biden administration will keep the rules.

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Trump’s plan

A Trump tweet in September read, “Just signed a new Executive Order to LOWER DRUG PRICES! My Most Favored Nation order will ensure that our Country gets the same low price Big Pharma gives to other countries. The days of global freeriding at America’s expense are over and prices are coming down FAST!”

It is not yet clear how quickly drug prices would be lowered and if the rule would apply to Medicare Part B and Part D, or just Part B, which usually only covers drugs administered by a physician in a hospital setting. Nevertheless, the Trump administration plans for the most-favored nations rule to be phased in over the first four years, starting this January, of a seven-year model that gradually shifts from a drug’s average sales price to the much-lower cost calculated by the formula.

If these new rules come through, Trump’s 2016 campaign promise to lower drug prices may finally be kept before his Presidency ends in January. 

PhRMA responds

Pharmacy experts argue that while the administration estimates that the new plan could save Medicare $85.5 billion over those seven years, it notes that “a portion of the savings is attributable to beneficiaries not accessing their drugs through the Medicare benefit, along with the associated lost utilization,” which could mean that actually fewer people could have access to certain medicines starting in 2023.

“It defies logic that the administration is blindly proceeding with a ‘most favored nation’ policy that gives foreign governments the upper hand in deciding the value of medicines in the United States,” said PhRMA president and CEO Stephen Ubl in a statement.

The group is “considering all options to stop this unlawful onslaught,” Ubl added.

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