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President Trump signs four executive orders to reduce drug prices, receives stakeholder criticism

The order reinstates a previously withdrawn rule mandating PBMs to give the rebate savings to consumers, rather than health plans.

Mallory Hackett, Associate Editor

President Trump has signed four executive orders that have the goal of lowering prescription drug prices but one that reinstates a previously withdrawn rebate rule is getting pushback from some stakeholders.

The order mandates that pharmacy benefit managers no longer give health plans a portion of the drug savings but give the rebates as discounts to consumers.  The Trump administration said the rule will save seniors an estimated $30 billion per year.


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Insurers and others say it will only increase prices for consumers. Insurers have said they use rebates to decrease premiums for all consumers. 

"We already know the rebate rule will increase those costs: The Administration's own actuaries previously found that the rebate rule will increase Medicare premiums for all seniors by 25%, give drug makers another $100 billion bailout, and have taxpayers foot the bill for higher costs," said Matt Eyles, president and CEO of AHIP. "The problem is the price. With the greatest urgency, the Administration should focus on bipartisan, workable solutions to protect patients, taxpayers, and all Americans from higher drug costs in their greatest time of need, especially in the middle of the COVID-19 crisis."


Other orders instruct the Secretary of Health and Human Services to take a number of actions, including easing drug importation guidelines to allows states to develop safe importation plans for certain prescription drugs. It also will authorize the re-importation of insulin products made in the U.S. and create a pathway for widespread use of personal importation waivers at authorized pharmacies in the U.S.

Next, the Trump administration requires federally qualified health centers that purchase insulins and epinephrine in the 340B program to pass savings directly to underserved and uninsured patients.

The final executive order states that the U.S. must pay the lowest price available in economically comparable countries for Medicare Part B drugs.

This order has the potential to save Medicare a significant amount of money, as the U.S. often pays 80% more for drugs than other countries, according to the White House. It will be implemented on August 24 unless drug companies can offer an alternative solution.


The argument over who is to blame for high drug costs is ongoing.

There has been much finger-pointing at Big Pharma, health insurers and PBMs. Others suggest that the problem is regulations that keep drug manufacturers from selling directly to the consumer.

Through rule-making, the Department of Health and Human Services has made price transparency its overall goal for healthcare.


"Today's Executive Order does what President Trump came into office with a mandate to do: disrupt a failed Washington status quo," said CMS Administrator Seema Verma. "Thanks to this bold step, Medicare will no longer be a powerless price taker, and American seniors will no longer foot the bill for the world's innovation while other countries take a free ride."

"We share the Administration's desire to address out of control prescription drug costs for seniors, but this previously withdrawn, pharmaceutical industry favored approach will not accomplish that goal. Instead, it threatens higher premiums and diminished supplemental benefits for millions of seniors in MA-PD plans – increasing out-of-pocket costs for vulnerable beneficiaries amid the height of a global pandemic," said Allyson Y. Schwartz, president and CEO of the Better Medicare Alliance. "The Administration was right to scrap this proposal the first time."

"The reboot of the Rebate Rule would hand Big Pharma a massive bailout paid for on the backs of Americans seniors and taxpayers," said Lauren Aronson, the CSRxP executive director. "The administration made the right call last year to halt this policy that would increase premiums on Medicare Part D beneficiaries, cost taxpayers more than $200 billion, hand Big Pharma a more than hundred-billion-dollar bailout and do nothing to lower prescription drug prices."

Twitter: @HackettMallory
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