President Signs New Executive Order on Drug Pricing

September 18, 2020

President Trump issued a new “Most-Favored-Nations” (MFN) executive order on September 13 that links U.S.-paid Medicare drug prices to those paid by other foreign countries. BIO President and CEO, Dr. Michelle McMurry-Heath, called the President’s action a “reckless scheme” that would hurt vulnerable seniors. The new order includes both Medicare Part B and Part D drugs and replaces the July 24 order that had only applied to Part B drugs.

In 2018, HHS issued a proposed rule to establish an International Price Index to determine Part B drug prices. The rule, which was never finalized, set prices based on the average price of drugs paid by foreign countries. The new order, however, is said to set the bar using “lowest price.” Exactly how the recent directive will be implemented is still uncertain, although industry observers believe that the Part B and Part D policies will advance through separate rulemaking. A Part B rule could come in the form of an Interim Final Rule, which would provide no meaningful opportunity for comment.

Imposing foreign price controls on the U.S. drug market could hit smaller drug discovery companies, which have taken root in Utah, particularly hard as capital will move to sectors with less risk for return on investment. Given that the U.S. is relying on U.S. drug companies to develop the vaccines and therapies to defeat COVID-19, the order is not only ill-timed, but also flies in the face of the innovation and R&D in new cures that has been the hallmark of America’s biopharmacuetical industry. In August, BioUtah and 10 Utah biopharmaceutical/biotechnology companies sent a letter to the Utah congressional delegation urging opposition to the MFN pricing model.

PhRMA as well as the U.S. Chamber of Commerce has come out strongly against the President’s executive order.  BioUtah will continue to oppose this misguided effort and continue to keep then life sciences community apprised of new developments.