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President Signs Executive Orders to Lower Drug Prices

July 28, 2020

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Mary Mullaney, Director, Hospital Payment Policies

President Donald Trump signed four executive orders (EOs) on July 24 aimed at reducing prescription drug prices. The EOs would require some savings derived from the 340B Drug Pricing Program and manufacturer rebates to be passed on to consumers; allow for the importation of certain drugs from other countries; and align prices for Medicare Part B drugs with prices in other countries. 

Federally Qualified Health Centers (FQHCs) would be required to pass discounts on insulin and epinephrine acquired under the 340B Program to consumers. Currently, the 340B Program allows all covered entities, which include FQHCs) to utilize 340B savings to expand services, including access to prescription drugs, to underserved patients.  

In addition, pharmacy benefit managers would be required to pass along manufacturer rebates under Medicare Part D to beneficiaries at the point of sale. The Department of Health and Human Services put forth a proposed rule in 2018 but did not finalize the proposals because of concern that beneficiaries’ premiums would increase due to the change. The EO requires that beneficiary premiums not rise under the proposal. 

The re-importation of some lower-cost drugs, including insulin manufactured in the United States, would be permitted. Some states have put forth similar proposals that would allow for the re-importation of lower-cost drugs from Canada. A pathway for individuals to request a waiver to purchase certain drugs at lower prices through an authorized pharmacy would also be created. 

Finally, a proposal to tie Medicare Part B drug prices to prices in other countries for certain drugs is included but not released. It is speculated that the proposal is similar to the international pricing index (IPI) proposal originally released in 2018. Under the IPI, reimbursement for certain physician-administered drugs covered under Medicare Part B would be tied to average prices in other countries.  The AAMC previously submitted comments expressing concerns about the proposed IPI model [see Washington Highlights, Jan. 10, 2019].

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