Big Pharma delivers counteroffer to Trump's drug pricing order, but details remain scarce
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On July 24, President Donald Trump signed four executive orders intended to curb skyrocketing drug prices in the United States — notable among them was the plan to match prices for certain Medicare drugs to those offered in other countries.
“Under this transformative order, Medicare will be required to purchase drugs at the same price as other countries pay,” Trump said at the signing. However, he noted that he would belay the executive order by 1 month “hoping that that the pharmaceutical companies will come up with something that will substantially reduce drug prices.”
After allowing Trump’s Aug. 24 deadline to come and go with little consequence, it appears the pharmaceutical industry has responded to the White House’s latest demands for lower drug prices with a plan of their own. What that plan includes, however, remains unclear.
Devil in the Details
“From what I understand, PhRMA did put an offer on the table,” Madelaine A. Feldman, MD, president of the Coalition of State Rheumatology Organizations and clinical assistant professor of medicine at Tulane University School of Medicine, in New Orleans, told Healio Rheumatology. “However, the details have not been released, and it was noted that almost every journalist who wrote about it got the details wrong.”
Reporting of the details in the industry counteroffer, devised by the Pharmaceutical Research and Manufacturers of America (PhRMA), have so far described “market-based discounts” of 10% on injectable drugs paid for by Medicare Part B. In addition, according to a report in Politico, the industry plan would set an out-of-pocket cap of approximately $10 to $15 on co-pays paid by patients for drugs covered under Medicare Part D.
“If they are correct, it would be a boon to Medicare Part D beneficiaries, because right now most patients — certainly those with rheumatoid arthritis — cannot afford specialty medicines in Part D,” she added. “That would be a boon for my patients, but I'm having a hard time believing that my patients could get a self-injectable biologic for $15 per month.”
During the executive order signing on July 24, Trump was adamant that he would hold to the 1-month deadline. “The clock starts right now. So, it’s August 24th at 12:00, after which the order ... will go into effect.” If the industry failed to develop their own plan by that time, or if the White House deemed it inadequate, HHS would then step in and cap U.S. drug prices based on those paid in select other countries, following a “favored nation” scheme, Trump noted at the time.
However, it was — and remains so now — unclear whether Trump was describing a wholly new plan or a second attempt at his internal pricing index proposal he first announced in 2018. That plan, which would have allowed Medicare to determine the price it pays for certain drugs based on the lower prices in other nations, was opposed not only by pharmaceutical companies but also Republicans in Congress.
In addition, Trump’s July 24 executive order included no wording of any proposed regulation, and no additional details have been released since.
Ongoing Negotiations
During the executive order signing, Trump noted that “the heads of the major drug companies have requested a meeting to discuss how we can quickly and significantly lower drug prices and out-of-pocket expenses for Americans.” However, either because it was never formally scheduled, or because industry leaders chose to rebuff the president, no such meeting occurred.
Yet, despite this initial hesitancy, and a rejection of the president’s deadline, PhRMA did eventually opt to present a plan.
“It is a little surprising that PhRMA submitted a plan, considering what has gone on back and forth between PhRMA and this administration, but any time parties are negotiating, it is a good thing and hopefully will lead to something better than the status quo,” Feldman said.
According to Politico, PhRMA claims its plan would save consumers $100 billion over the next 10 years. The industry group also reportedly pledged to work with the White House on additional reforms to Medicare Parts B and D.
Still, even if these details hold true, much of the plan’s specifics remain unknown, including which drugs would be covered. In addition, PhRMA’s reported offer of 10% savings on drug prices pales in comparison to the 30% savings the White House has previously projected for its international pricing index proposal.
“There are so many details that are lacking on the Part B side that I would hesitate to say anything on that,” Feldman said. “The devil is in the details with any type of Part B deal.”
However, there remains one aspect of any industry proposal that the Trump administration may find persuasive — its immediacy. Unlike the White House’s proposal, which would require a time-consuming rule-making process and be subject to numerous lawsuits brought on by pharmaceutical companies, the PhRMA plan represents a voluntary price cut. As such, the industry plan could be implemented quickly, possibly before the November election.
“If it were to go through rule-making, not only does that take time but there are lawsuits that could happen that could extend the process into next year before we even find out if it could become a finalized, legal rule,” Feldman said. “Whereas if it were something coming directly from the manufacturers, that could be instituted before the election, which is what the administration would be looking for.”
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Madelaine A. Feldman, MD, can be reached at 2633 Napoleon Ave. #530, New Orleans, LA 70115; email: madelainefeldman@gmail.com.
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