President Trump signed a controversial Executive Order on September 13, 2020 entitled Executive Order on Lowering Drug Prices by Putting America First with the intention of tying drug costs paid by the Medicare program to the costs borne by countries that have national health systems. The Executive Order provides that “[i]t is the policy of the United States that the Medicare program should not pay more for costly Part B or Part D prescription drugs or biological products than the most-favored-nation price.” It defines “most-favored-nation price” as:
The lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturers sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.
Additionally, President Trump instructed the Secretary of Health and Human Services to undergo rulemaking in order to implement two payment models to test whether “paying no more than the most-favored-nation price would mitigate poor clinical outcomes and increased expenditures associated with high drug costs.” The first payment model would apply to payments for certain high-cost prescription drugs and biological products under Medicare Part B. The second payment model would apply to “Part D prescription drugs or biological products where insufficient competition exists and seniors are faced with prices above those in OECD member countries that have a comparable per-capita gross domestic product to the United States, after adjusting for volume and differences in national gross domestic product.”
In a press release, the U.S. Chamber of Commerce urged reconsideration of the policy and stated that “importing price controls from foreign countries is flawed and dangerous policy that will result in a substantial reduction in investment in new cures and drugs at the worst possible time.”
Norton Rose Fulbright attorneys will continue to provide relevant updates for healthcare providers on the Health Law Pulse related to drug pricing reform.