By Peter Johnson
In executive orders released July 24, the Trump administration renewed its push toward a signature campaign issue: lowering drug prices. The three executive orders call for regulations allowing drugs to be imported from other countries, requiring Federally Qualified Health Centers to make insulin and epinephrine available to low-income members of the public at the discounted prices set by the 340B Drug Pricing Program, and removing safe harbor protections under the Anti-Kickback Statue for prescription drug rebates in Medicare Part D.
“I think that what you have here is a collection of policies that are intended to make noise, but will have little to no practical effect on drug prices before the election,” Avalere founder Dan Mendelson says.
Marc Samuels, CEO of ADVI, says that the proposals seem half-baked, and will likely draw strong opposition. “These executive orders are consistent with the previous [drug pricing] blueprint adopted by the Administration and debated in part in Congress. But having the authority to make quick changes doesn’t mean doing so is a good idea, especially so close to an election,” he says.
The idea of importing drugs from other developed countries, and relying on their drug safety inspection regimes, has popped up in the past. Mendelson, who ran the health division of the Office of Management and Budget between 1998 and 2000, says that although the Clinton administration considered the idea seriously, it found that it wasn’t feasible.
“We looked at it and rejected the policy because we were concerned that it wouldn’t work, and that in fact it would not only compromise the pharmaceutical supply chain but also likely be rejected by the very countries we would want to import the drugs from,” Mendelson explains.
The rebate order addresses a persistent challenge for the administration. And Citi analyst Ralph Giacobbe is skeptical that the proposal will actually manifest substantial changes in the way PBMs do business.
“While this will resurrect some debate on the PBM business model, we see the likelihood as either low or limited in scope,” Giacobbe wrote in a note. “Additionally, [with] the language of HHS having to confirm that this action does not increase federal spending, Medicare beneficiary premiums or out-of-pocket cost may make it a moot point since premiums will definitively rise, in our opinion.”
A fourth executive order would tie drug prices to their list prices in countries with Most Favored Nation status. That order has not yet been released, but could be in the coming weeks.