By STEPHEN SHAVER
This summer, President Donald Trump issued four orders targeting prescription drug prices. Three issued on July 24, 2020 with a fourth being signed, but not issued at that time. The fourth order appeared Sept. 13, 2020. All of the orders seek to lower prescription drug prices by directing the Department of Health and Human to exercise its regulatory authority. However, as each order requires significant legwork by HHS, it is unclear when, if ever, the effects of the orders will be seen.
The most recent order, issued Sept. 13, 2020 and titled “Executive Order on Lowering Drug Prices by Putting Americans First,” outlines a policy that Medicare should not pay more for Part B or Part D prescription drugs than the “most-favored-nation price.” The order defines the “most-favored-nation price” as the lowest price, adjusting for volume and differences in GDP, for a drug that the manufacturer sells to an Organization for Economic Co-operation and Development (OECD) member country with a comparable GDP per capita. For reference, Norway, Austria, and the Netherlands are all OECD member countries with GDPs per capita similar to the United States.
The order directs HHS to “immediately” implement a test payment model. The test model would apply the new policy to certain high-cost prescription drugs and biological products covered by Part B to determine whether paying the “most-favored-nation price” leads to better clinical outcomes and/or cost-saving. The order also directs HHS to develop and implement a similar test payment model for Part D prescription drugs but does not impose a timeline on HHS to do so. The details and precise timing of these both payment models remains unclear. Further, the order faces significant opposition from pharmaceutical companies, who may seek to challenge its implementation in the courts.
Three other orders were issued on July 24, 2020. The first, titled “Executive Order on Access to Affordable Life-saving Medications,” directed HHS to require Federally Qualified Health Centers (FQHCs) to provide insulin and injectable epinephrine at cost, plus a minimal administrative fee, to certain low-income patients. The order defined “low-income” patients as patients with high cost-sharing requirements for insulin or injectable epinephrine, with a high unmet deductible, or without health insurance. The order directed HHS to enforce this price-setting by making it a condition of grants under Sec. 330(e) of the Public Health Services Acts.
The second July 24, 2020 order, titled “Executive Order on Increasing Drug Importation to Lower Prices for American Patients,” directed HHS to facilitate importation of prescription drugs by issuing waivers for individuals to import prescription drugs pursuant to 21 U.S.C. § 384(j)(2); authorizing reimportation of insulin for emergency medical care pursuant to 21 U.S.C. § 381(d)(2); and completing the rulemaking process required by 21 U.S.C. § 384(b) to permit pharmacists and wholesalers to import prescription drugs from Canada. However, the order requires that any waivers granted for importation of prescription drugs by an individual be based on a determination by HHS that the importation poses no additional risk to public safety and results in lower costs to patients. 21 U.S.C. § 384(j)(2)(B) also requires HHS to release guidance as to how it will grant such waivers.
The third and final July 24, 2020 order, titled “Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen,” directs HHS to complete the rulemaking process to exclude retroactive rebates paid to pharmacy benefit managers (PBMs) from safe harbor protections under the anti-kickback statute and to establish new safe harbors to apply discounts at the patient’s point-of-sale. However, prior to taking any such action, HHS must confirm that the action will not increase federal spending, Medicare premiums, or patient out-of-pocket costs and must publish the confirmation.
Each of these orders requires significant action by HHS, including revising grants, drafting guidance, conducting studies of effects, and creating new payments models. Many also require HHS to engage in the rulemaking and public comment process. As such, these orders are unlikely to have an immediate effect on prescription drug prices. Instead, significant legal developments and guidance from HHS are to be expected before the practical impact of the orders are known.