President Donald Trump says he is working on an executive order that will peg the price the US is prepared to pay for medicines to the lowest price among a list of ‘favoured nations’.
The White House has been talking about this type of reference pricing for prescription drugs since the administration published a blueprint for pricing controls last year, which focused on capping US prices based on an average of prices charged in a basket of other industrialised countries.
The new approach is slightly different as it seems to abandon the average pricing approach, although details remain sketchy. Trump says he will publish the order “very shortly”, but for now what is known is that it will operate as a pilot programme covering a limited number of drugs initially and run through 2025.
According to the earlier plan, the pricing plan would apply to drugs in Medicare Part B, which covers drugs prescribed by a physician in a hospital or clinic.
“As you know, for years and years other nations paid less for drugs than we do. Sometimes by 60-70%,” he told reporters at the White House on Friday.
“We’re working on a favoured nations clause, where we pay whatever the lowest nation’s price is. Why should other nations — like Canada — why should other nations pay less than us?”
Setting US prices against those overseas is just the latest in a series of new proposals in Trump’s war on drug prices, coming after plans to do away with the current rebate system for medicines to prevent ‘middlemen’ taking a cut of a medicine’s price, and placing list prices in direct-to-consumer (DTC) television advertising.
There are also measures aimed at reducing out-of-pocket costs, including the introduction of a spending cap for Medicare beneficiaries, and measures to speed up low-cost drug competition including reform of the 180-day exclusivity rule for first-to-market generics.
In a preamble to the latest executive order announcement, Trump also claimed – wrongly – that 2018 was the first year in more than five decades where prescription drug prices fell in the US.
Health secretary Alex Azar had previously tweeted that in 2018 drug companies announced “smaller and fewer drug price increases”, although that clearly doesn’t imply that prices fell overall. A number of the big pharma companies simply deferred price hikes until the start of 2019.
