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Utah Life Sciences News & Events

President Trump to Sign Executive Orders to Lower Drug Prices

July 24, 2020

While the drug pricing issue has been sidelined amid the COVID-19 pandemic, President Trump is now returning to the issue with several executive orders that he is expected to sign today. According to a report by The Hill, Republican lawmakers have been invited to a presidential event on drug pricing today at 3 p.m. at the White House.

The orders will reportedly include a directive to ensure that Medicare doesn’t pay more than other developed countries for certain drugs (known as the “most-favored nation” clause). Another order will likely address the 340B program, that gives hospitals access to steeply discounted medicines. Unfortunately, an order to ban rebates paid to pharmacy benefit managers (PBMs), which was said to be under consideration, is not in the mix.

The “most-favored nation” approach is similar to an international pricing index (IPI) model, which Trump has supported in the past. Democrats included IPI in their drug pricing bill which passed the House last December, but Senate Republicans have largely rejected this direction.

A recent Forbes article criticized the use of an international pricing index noting that “since all those nations use various forms of price caps to suppress the cost of medicines, this “reference pricing” order would function as a de facto price control.” 

The article went on to say, “President Trump is right to think it’s unfair that Americans pay more for drugs than people in other rich nations. But the order wouldn’t make American patients’ lives any better. Everywhere they’ve been tried, price controls have reduced biopharmaceutical research spending, resulting in fewer vaccines, therapeutics, and cures.”

“Using an IPI model to set drug prices in the U.S. is a losing proposition for patients and innovation in the long-term,” said Kelvyn Cullimore, president and CEO of BioUtah, “Critical drug research and development would slow significantly, and investors would think twice about betting on biotechnology startups. Whether it’s vaccines and treatments for COVID-19 today, or for a future pandemic, we need policies that help drive, not undermine, new therapies and cures.”

Details on the orders are still unclear. However, it’s possible that the orders could require additional regulatory action, raising questions about what the regulatory path would look like, and how quickly rules could be promulgated. 

BioUtah and our biopharma partners oppose government engineered price controls that ultimately impede drug research and investment. BioUtah supports alternatives, such as a ban on drug rebates, to ensure that cost savings are passed along to the consumer. The administration had previously withdrawn a proposed rule to eliminate rebates in the face of strong opposition from PBMs.

The prospect of these executive actions has already prompted pushback from Republicans as well as the pharmaceutical industry.

It’s not surprising that President Trump is rebooting his drug pricing message given that lowering the price of prescription drugs was a 2016 campaign promise, which laid the foundation for the President’s 2018 drug pricing blueprint.