Benefits of drug pricing executive orders unclear, expert says
President Donald J. Trump recently signed four executive orders aimed at lowering prescription drug prices for Americans.
“The four orders that I’m signing today will completely restructure the prescription drug market, in terms of pricing and everything else, to make these medications affordable and accessible for all Americans,” Trump said during his remarks on the orders.
Alex Azar, president of HHS, said in a press release that the orders “will deliver billions of dollars in discounts directly to patients at the pharmacy counter, safe low-cost imported drugs for Americans, the best deals for America on highly expensive drugs, and direct discounts passed on to patients on important drugs from community health centers.”
He added that Trump’s “new efforts to cut drug costs are about making it affordable for American patients to be in control of their own health, their own healthcare choices, and the care they decide on with their own doctor.”
What the orders say
The first executive order will direct federally qualified health centers (FQHCs) to pass discounts on insulin and epinephrine that they receive from drug companies to some low-income patients, according to a statement issued by the White House.
The second will allow states to develop plans to import certain drugs and authorizes the re-importation of U.S. insulin products, and the use of individual importation waivers at pharmacies with authorization to do so.
According to the White House, the third order will prohibit “secret deals” between manufacturers and pharmacy benefit managers (PBMs) to provide patients with direct benefits from any available discounts.
The fourth executive order would reduce the costs that Americans pay for Medicare Part B medications to be comparable to the prices in other countries. In hopes that pharmaceutical companies will come up with an alternative strategy to substantially reduce drug costs, Trump said the fourth order will not be released until Aug. 24.
He said he would meet with representatives from pharmaceutical companies to discuss these alternative options. However, the meeting did not take place when initially scheduled; Politico reported that this was because major drug lobbies refused to attend.
Will they work?
Nancy Nielsen, MD, PhD, senior associate dean for health policy in the Jacobs School of Medicine and Biomedical Sciences at the University at Buffalo and a former senior advisor at CMS, told Healio Primary Care that the executive orders have been all been explored previously but were then pulled because of “a variety of realities.”
She said the orders attempt to lower prices and fulfill campaign promises made by Trump, but they “are really tinkering at the margins of a very serious affordability problem and are weak attempts to make drugs in this country more accessible to individuals.”
She noted that “it’s not at all clear” how much relief these executive orders will provide patients, but said the exception is the fourth executive order, “which could substantially lower drug prices.”
According to Nielsen, although the president said the executive orders will massively reduce drug prices, “there is little evidence that costs will come down if these measures are implemented.”
For instance, she said with no PBMs to negotiate lower prices based on volume, prices may increase. The administration previously proposed this approach to lowering drug costs last year, but the Congressional Budget Office and the CMS Office of Actuary determined that it would raise premiums for Medicare patients and increase federal spending, Nielsen said.
However, she said it could result in lower costs for older adults taking certain drugs who currently have high rebates.
In addition, she said the first executive order — regarding FQHCs — may not benefit many patients because many patients who present at these centers receive medications at no cost.
“Unintended consequences of any new rule have to be explored and publicly described by HHS in its rulemaking process, and it’s guaranteed that drug companies will fight tooth and nail to stop implementation of all these executive orders,” Nielsen said.
“[Pharmaceutical Research and Manufacturers of America] will vigorously oppose all of these orders, using patients to decry ‘lack of access’ to life-saving medications if the government fixes prices or allows drug importation,” she continued. “Count on this to be a battle for the ages.”
Pharmaceutical manufacturer response
In a statement, Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), said that Trump’s “attempt to open our country up to socialized health care sets America, our economic recovery and scientic progress back at a time when we need them most.”
“In the middle of a global pandemic, when nearly 145,000 Americans have lost their lives and millions of others have suered untold economic hardships, this administration has decided to pursue a radical and dangerous policy to set prices based on rates paid in countries that he has labeled as socialist, which will harm patients today and into the future,” he said.
In a conference call discussing the pharmaceutical company’s second quarter earnings, CNBC reported that Albert Bourla, CEO of Pfizer, said “overall, I’m disappointed with this executive order. They pose enormous destruction in a time when the industry needs to be completely focused on developing a potential COVID-19 vaccine or treatment.”
CNBC reported that a spokesperson from Pfizer later clarified that he had meant to say “enormous distraction,” rather than “enormous destruction.”
Ubl also claimed the executive order “is a reckless distraction that impedes our ability to respond to the current pandemic — and those we could face in the future. It jeopardizes American leadership that rewards risk-taking and innovation and threatens the hope of patients who need better treatments and cures.”
References:
HHS. Trump Administration Announces Historic Action to Lower Drug Prices for Americans. https://www.hhs.gov/about/news/2020/07/24/trump-administration-announces-historic-action-lower-drug-prices-americans.html. Accessed August 3, 2020.
Lovelace, B. Pfizer CEO says Trump’s executive orders overhauling U.S. drug pricing will upend the industry. https://www.cnbc.com/2020/07/28/pfizer-ceo-says-trumps-executive-orders-overhauling-us-drug-pricing-will-cause-enormous-destruction.html. Accessed August 4, 2020.
PhRMA. PhRMA Statement on Drug Pricing Executive Orders. https://www.phrma.org/en/Press-Release/PhRMA-Statement-on-Drug-Pricing-Executive-Orders. Accessed August 3, 2020.
White House. President Donald J. Trump Is Taking Action to Lower Drug Costs and Ensure That Americans Have Access to Life-saving Medications. https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-taking-action-lower-drug-costs-ensure-americans-access-life-saving-medications/. Accessed August 3, 2020.
White House. Remarks by President Trump at Signing of Executive Orders on Lowering Drug Prices. https://www.whitehouse.gov/briefings-statements/remarks-president-trump-signing-executive-orders-lowering-drug-prices/. Accessed August 3, 2020.