As Trump touts executive orders on drug pricing, Dems and drug-makers raise concerns

WASHINGTON (Sinclair Broadcast Group) — The White House predicts executive orders signed by President Donald Trump last week will save Americans billions of dollars a year in prescription drug costs, but drug-makers, Democrats, and some conservatives say the measures would have little positive impact, if they accomplish anything at all.

President Trump announced four executive orders Friday that the White House asserted would “significantly” lower the cost of life-saving medications for Americans. Under the orders:

• Federally-qualified health centers would be required to pass on discounts on insulin and epinephrine to low-income Americans
• States, pharmacies, and wholesalers could safely and legally import drugs from other countries like Canada where prices are lower
• Drug companies would be prohibited from providing rebates to pharmacy benefit managers
• Medicare Part B drug prices would be indexed to the lowest prices among economically-advanced countries

Trump said the fourth order, known as a most-favored-nations rule, might not be necessary if drug companies can provide a better alternative in the next 30 days. However, Politico reported a meeting between the White House and pharmaceutical executives planned for Tuesday was canceled because major drug lobbies refused to send representatives.

“If they do not like MFN, they need to come forward with an approach that could substitute for that, that would achieve the goal the President has laid out for the benefit of the American people and the Medicare program,” Health and Human Services Secretary Alex Azar told reporters Friday. “If they do that, then he’ll consider not implementing; and if not, we will move forward.”

None of the orders are immediately enforceable, and it is not clear what practical effect they might have before the November election. The order on pharmacy benefit manager rebates, in particular, would only take effect if HHS determines it would not increase federal spending, premiums, or out-of-pocket costs, and that might not be possible.

“The orders themselves will have absolutely no impact at all,” said Gerard Anderson, director of the Johns Hopkins University Center for Hospital Finance and Management. “They are just guidance from the president to the secretary of HHS but have no force of law, rule or regulation.”

Analysts at consulting firm Avalere said in a report Sunday that there is much uncertainty about how these proposals would work and how much they would save consumers. They have the potential to alter how drug companies operate in the U.S. if fully implemented, but that might not necessarily mean lower prices for patients.

Pharmaceutical companies have already started pushing back against the new policies, running television ads warning drug importation and price controls could result in higher prices. On Twitter Tuesday, Trump accused drug-makers of lying about the impact of his orders, and he claimed they would cut drug costs by 50%.

“So when you see those nasty ads from Big Pharma remember, the only reason they are going all out is the massive PRICE REDUCTIONS you are getting - not good for them,” he wrote.

Democrats are highly skeptical of the president’s boasts of massive savings. House Speaker Nancy Pelosi, D-Calif., accused Trump of caving to pressure from drug companies and adopting proposals that could result in higher premiums and out-of-pocket costs for senior citizens.

“Once again, President Trump has pulled his punch on reducing prescription drug prices, this time with empty Executive Orders that take no real action to lower Americans’ skyrocketing drug costs,” Pelosi said in a statement. “After promising that he would ‘negotiate like crazy’ for lower prescription drug prices, it is clear that President Trump meant not negotiate at all.”

Drug-makers do not see the orders as a giveaway to them. Pharmaceutical Research and Manufacturers of America alleged the most-favored-nations rule would “open our country up to socialized health care” and impede efforts to develop treatments for the coronavirus.

“The research-based biopharmaceutical industry has been working around the clock to develop therapeutics and vaccines to treat and prevent COVID-19,” PhRMA President and CEO Stephen Ubl said. “The administration’s proposal today is a reckless distraction that impedes our ability to respond to the current pandemic – and those we could face in the future.”

Pfizer CEO Albert Bourla reportedly told investors on an earnings call Tuesday the orders could distract the pharmaceutical industry from research on a coronavirus vaccine. He also suggested the president’s actions might lead the company to scale back plans to expand its U.S. operations.

According to Anderson, the limited measures proposed by President Trump would not cost drug-makers much money, but companies likely fear they will lead to more expansive reforms down the line that would have greater consequences.

“I think they know this is just the first of many changes and they’re going to try to stop it at the beginning,” he said.

Still, even some conservative groups that have supported other Trump administration policies have raised concerns about indexing drug prices to prices set in other countries or importing cheaper medications from abroad. They allege such policies would lead to higher costs and reduce incentives to develop new drugs.

“Americans pay more for prescription drugs in part because these foreign price controls have forced American companies to sell their products overseas for less than they are worth, squeezing that cost bubble to the detriment of American patients,” said Pete Sepp, president of the National Taxpayers Union. “In seeking to emulate those foreign countries and their price controls, these Executive Orders would only shift costs on to American patients in private insurance plans.”

Others say pressuring other countries to lift their price controls would be more effective than trying to adopt them. Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council, warned smaller pharmaceutical companies could be hit hardest if the order is implemented.

“Price controls never work, and when it comes to life-saving drugs and innovative medicines, today’s EO will undermine America’s strong leadership and competitive advantage,” Kerrigan said. “Rather than embrace price controls, the administration needs to boldly address this imbalance through trade agreements with countries that are ripping us off.”

The Wall Street Journal editorial board dismissed the executive orders as a “haphazard” attempt by the president to adopt the type of government controls favored by Democrats, claiming the new policies could increase out-of-pocket costs for patients, hinder innovation in the U.S., and empower China. It also noted the Trump administration previously shelved some of these proposals due to legal and practical concerns.

Nothing will happen until the federal rule-making process is complete, though, and that could take months or longer. Democrats in Congress are pushing for more sweeping actions that would restrict price increases and apply international price indexing to all drugs, but Anderson said Trump’s proposals would represent a good start toward bringing down out-of-pocket costs for consumers if they ever take effect.

“I’m an incrementalist, and I believe you should start slowly and build up to that,” Anderson said.