On July 24th, 2020, President Trump signed four Executive Orders focused on lowering drug prices. The goal of these four orders, is to restructure the prescription drug market, in terms of pricing to make the medications more affordable and accessible for Americans.
The first being the Executive Order on Access to Affordable Life-saving Medications. The reason for this order, is due to the rising costs of life-saving medications like insulin, to help manage diabetes, and epinephrine, to stop severe allergic reactions. The first order will require federal community health centers to pass the discounts they receive from drug companies directly to their patients. This policy is designed to help low-income Americans purchase these pharmaceuticals from an FQHC (Federally Qualified Health Center) at a price that aligns with the cost at which the FQHC acquired the medication. This access to 340b pricing is going directly to consumers and will not include hospitals.
The second order is the Executive Order on Increasing Drug Importation to Lower Prices for American Patients. Americans spend more per capita on pharmaceutical drugs than residents of any other developed country. Americans often pay more for the exact same drugs, even when they are produced and shipped from the exact same facilities. This order allows for individual state plans for the safe importation of certain drugs, authorizes the re-importation of insulin products made in the United States, and creates a path for widespread use of personal importation waivers at authorized pharmacies throughout the United States.
One of the reasons pharmaceutical drug prices in the United States are so high is because of the complex mix of payers and negotiators that often separates the consumer from the manufacturer in the drug-purchasing process. That’s where the third order, Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen, comes in. This order prohibits any clandestine deals between drug manufacturers and pharmacy benefit managers, ensuring patients directly benefit from available discounts at the pharmacy counter. This is the “Rebate Order” and is the most controversial as it could add complexity to present programs within Medicare Part D.
The fourth and final order aims to ensure that the United States will pay the lowest price available in economically comparable countries for all Medicare Part B drugs. This fourth-order does not become effective until August 24th. President Trump is waiting for input from the pharmaceutical companies, hoping they will come up with a strategy to reduce drug prices.
These executive orders are unlikely to see the light of day in this election year, but certainly require our review and input for all our clients. Certain versions of these prospective orders have been put forth by the legislature on both sides of the aisle. The complexity of the pricing surrounding the delivery of the pharmaceutical benefit is the real subject here and a solution will not be very cut and dry.
If you have additional questions on how this will influence you or your organization, contact us!