By Peter Johnson
A promised executive order that would tie drug prices to their costs in other countries has yet to emerge, although President Donald Trump has promoted the order as part of his re-election campaign. Meanwhile, payers and PBMs are continuing to push back against three executive orders the Trump administration issued in July with the intention of lowering drug prices, one of which would overhaul the Medicare Part D prescription drug rebate system.
“I think the purpose of these executive orders is to give the president some talking points going into the debates,” says Avalere Health founder Dan Mendelson. He adds that, regardless of their purpose, the orders will not make a difference in the real world any time soon.
Administration officials indicated during the rollout of the executive orders on July 24 that the international pricing order would be released within 30 days of the debut of the other three drug pricing orders. Yet the deadline passed and the administration at press time had not released the promised order.
Meanwhile, the executive orders that actually have been released are being criticized from stakeholders across health care. The order that would remove safe harbor protections from the Anti-Kickback Statute for prescription drug rebates in Medicare Part D has been panned even by conservatives.
Alex Brill, a resident fellow at the American Enterprise Institute (AEI), penned a white paper sponsored by PBM trade group Pharmaceutical Care Management Association (PCMA) that concluded the executive order would “restrict an important tool for providing savings to the federal government and Medicare Part D beneficiaries. Moreover, net drug costs and drug company revenues would rise significantly if the Medicare Part D safe harbor for rebates is eliminated.”
Mendelson says that the pharmaceutical industry is beginning to realize that it will have to change its business model one way or another.
“The pharmaceutical industry is facing a real pivot point where there are going to have to be more innovative ways to price for these products,” Mendelson observes. “…it’s really important that the industry start to figure out ways to engage positively with payers. And the government is the biggest payer.”