U.S. President Donald J. Trump on Sunday signed an Executive Order which would lower drug prices for Americans to be more in line with the “most-favored-nation price.”
The goal is to provide lower cost medicine to the unwell to ensure that they follow through with prescriptions, as many people don’t complete the medication course because of the high costs.
The Executive Order provides for the Secretary of Health and Human Services to begin to implement a plan and test a payment model where Medicare would pay for certain high-cost prescription drugs and biological products covered by Medicare Part B, at no more than the most-favored-nation price.
“It is the policy of the United States that the Medicare program should not pay more for costly Part B or Part D prescription drugs or biological products than the most-favored-nation price.”
The “most-favored-nation price” shall mean the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.
This means that the U.S. will no longer pay a cost higher than another country with a similar National GDP within the countries that belong in the OECD.
Currently, there are 36 countries in the OECD.
“The Council of Economic Advisers has found that Americans finance much of the biopharmaceutical innovation that the world depends on, meanwhile foreign governments enjoy bargain prices for such innovations as the primary buyer and provider of pharmaceuticals to their citizens.”
“Americans should not bear extra burdens to compensate for the shortfalls that result from the nationalized public healthcare systems of wealthy countries abroad.”
The Secretary will also ensure in that plan and payment model testing that Medicare would pay, for Part D prescription drugs or biological products where insufficient competition exists and seniors are faced with prices above those in OECD member countries that have a comparable per-capita gross domestic product to the United States, after adjusting for volume and differences in national gross domestic product, no more than the most-favored-nation price, to the extent feasible.
The Federal Government is the largest payer for prescription drugs in the world, but it pays more than many smaller buyers, including other developed nations. This directly impacts Americans and has a disproportionately high impact on the poorest among us.
The order, called, Executive Order on Lowering Drug Prices by Putting America First, says the rising prescription drug prices have had on Americans both physically and financially.
“High prices cause Americans to divert too much of their scarce resources to pharmaceutical treatments and away from other productive uses. High prices are also a reason many patients skip doses of their medications, take less than the recommended doses, or abandon treatment altogether.”
“Americans pay more per capita for prescription drugs than residents of any other developed country in the world. It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places. Other countries’ governments regulate drug prices by negotiating with drug manufacturers to secure bargain prices, leaving Americans to make up the difference.”
Fixing the crisis around prescription drug prices was a campaign promise made by President Trump in 2016.