Trump most favored nations drug price executive order: What to know

Trump’s order takes aim partly at other countries, a lot of which have single-payer health systems with more leverage to barter down drug prices with manufacturers. In contrast, the U.S. has a patchwork of private and non-private insurance and partly relies on middlemen to set prices. 

The president’s policy directs the Office of the U.S. Trade Representative and the Department of Commerce to fight what the administration called “unreasonable and discriminatory policies” in foreign countries that “unfairly undercut market prices and drive price hikes in america.”

In an announcement on Monday, the pharmaceutical industry’s biggest lobbying group, PhRMA, lauded Trump for taking aim at other nations for what they deemed “not paying their justifiable share.” 

But other countries’ governments are simply negotiating inside the limits of their national health budgets, not using “unfair” methods like Trump claims, said Lawrence Gostin, a professor of public health law at Georgetown University. He added that they’re securing fair prices for their very own countries, which “has nothing to do with undercutting the U.S.”

It’s unclear what actions the U.S. could take to force other nations to take motion, but Anderson said there’s currently no incentive for them to hike their prices. 

“They’ve a system that works for them and so they get lower prices. Countries like France and Switzerland are all not going to sit down there and say, ‘Hey, now I need to pay more,'” he said. 

The pharmaceutical industry would likely wish to to see price hikes in countries inside the European Union before it voluntarily lowers any drug prices within the U.S., JPMorgan analysts said. That makes other pieces of the chief order appear unlikely to come back to pass.

Trump’s order directs the Health and Human Services secretary to ascertain a way for U.S. patients to purchase their drugs directly from manufacturers at “most favored nation” prices, cutting out middlemen. The order mentions “direct-to-consumer purchasing programs,” without further details.

His plan also calls for HHS Secretary Robert F. Kennedy Jr. to present drugmakers price reduction targets inside the following 30 days, which is able to open up negotiations with the businesses. If “adequate progress” will not be made toward those goals inside six months of the order being signed, HHS will impose most favored nation pricing on drugs through rulemaking or “other aggressive measures,” in keeping with the order.

But Anderson said it will likely take far longer for the federal government and drugmakers to agree on a price. Under a provision of the Inflation Reduction Act, Medicare and drug manufacturers typically take six months to a 12 months to barter prices. 

He added, “Why would any drug company ever lower their prices voluntarily?” Anderson noted that the order didn’t provide details on the precise actions the administration could take against drugmakers who don’t agree, so the incentives are unclear. 

The Department of Justice and Federal Trade Commission may also take motion against “anti-competitive actions” that keep prices high within the U.S., White House officials said. 

“There will likely be an expectation that those prices should come down. After which in the event that they don’t, we will likely be our various policy levers that will be used to force those prices down,” one official said. ‘We absolutely are going to get a greater deal.'”

The order also directs the Food and Drug Administration to think about expanding imports from other developed nations beyond Canada. Trump signed a separate executive order in April directing the FDA to enhance the method by which states can apply to import lower-cost drugs from Canada, amongst other actions intended to lower drug prices.

The Trump administration claims that some drug prices will fall by as much as 90% “almost immediately.”

White House officials also said the administration may have a specific concentrate on drugs which have the “largest disparities and largest expenditures,” which could include popular weight reduction and diabetes treatments called GLP-1 drugs.

But experts solid doubts on whether the administration can cut prices significantly, because it’s still unclear which drugs and nations will likely be targeted, and whether other countries and drugmakers will comply. 

“We do not know the list of countries included,” said Tricia Neuman, executive director for this system on Medicare policy at KFF, a health policy research group. “Their pricing would make an enormous difference in what our prices can be, which could then affect access within the U.S.”

In Anderson’s view, the order as written won’t be effective at lowering drug prices. 

“It’s an ideal idea to pay international prices, however it’s the way you get to implement it. There are not any details and skill to effectuate it,” he said. 

Gostin also added that Americans will likely not see lower prices “within the foreseeable future.” 

Still, AARP, which advocates for older Americans, thanked Trump for issuing the order in an announcement on Monday.

“It’s secure to say that we’re enthusiastic about any attempts to assist bring down prescription drug prices,” said Leigh Purvis, the prescription drug policy principal in AARP’s Public Policy Institute. “This approach is unusually comprehensible to the general public because I believe there is a general understanding that America does pay the very best prescription drug prices on the earth.”

She added that the “devil is in the small print, and that is what we’re looking forward to seeing more of.”