July 30, 2020

President Trump Issues Executive Orders on Drug Prices

As we continue to wait for the 2021 Medicare physician fee schedule (PFS) proposed regulation to be released, the Trump Administration has been making other regulatory headlines.

Last Friday, President Trump signed the following three executive orders aimed at reducing prescription drug costs.

The Executive Order on Access to Affordable Life-saving Medications would require the Department of Health and Human Services (HHS) to only provide grants to federally qualified health centers (FQHCs) if they make insulin and injectable epinephrine available to certain low-income individuals at the same discounted price that the FQHCs paid for these drugs under the 340B Prescription Drug Program. 

The Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen revives a controversial proposed reg that has not yet been finalized that would eliminate safe harbor protections (kickbacks) for payments made by manufacturers to insurers, pharmacy benefit managers (PBMs), and pharmacies in Medicare Part D. It would also establish new safe harbors that would permit health plan sponsors, pharmacies, and PBMs to apply discounts at the patient’s point-of-sale to lower the patient’s out-of-pocket costs. Part of the reason why the rule was never finalized was that it was projected to inflate Medicare premiums. The executive order calls on HHS to guarantee that the policy does not increase federal spending, Medicare premiums, or patients’ total out-of-pocket costs before it can be finalized.

The Executive Order on Increasing Drug Importation to Lower Prices for American Patients instructs the HHS Secretary to finalize another proposed reg that would allow for drugs to be imported from other countries.

The President also hinted at future action to cap the price that Medicare pays for drugs based on the costs of the drugs in other countries. That policy could go into effect next month unless the pharmaceutical industry can present the administration with a better alternative.

These executive orders are part of President Trump’s long-term stated goal of trying to reduce the cost of prescription drugs. Over the past couple years, ACEP has commented on a few of the Trump Administration’s proposed efforts to lower drug prices, including the Center for Medicare & Medicaid Innovation’s proposed International Pricing Index payment model and a proposal to require Medicare Part D plans to include performance-based pharmacy price concessions in the price of drugs. We know that you, as emergency physicians, see clearly every day how the high price of prescription drugs can impact the health and wellbeing of your patients—causing adverse health outcomes and costly inpatient admissions. Therefore, in our comments on drug pricing proposals, we have continued to emphasize our support for policies that would help make life-saving medicines more affordable to your patients.

It is important to remember that executive orders themselves do not establish new policies. Rather, they simply provide instructions to federal agencies to implement policies through regulatory rulemaking. In other words, the policies included in executive orders aren’t actually effective until federal agencies release regs implementing them. For more information on executive orders, please click here.

Until next week (or sooner depending on when the PFS proposed reg is released!), this is Jeffrey saying, enjoy reading regs with your eggs!

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