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President Trump Signs Executive Order on Prescription Drug Pricing

September 18, 2020

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CONTACTS
Mary Mullaney, Director, Hospital Payment Policies

President Donald Trump signed an executive order on Sept. 13 aimed at aligning prescription drug prices with those found in other countries.

Under the new executive order, which replaces a version signed on July 24, Medicare would pay the same price for certain drugs covered under Part B and Part D as other countries pay, which the order refers to as the most-favored-nation price. The most-favored-nation price is 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 Organization for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.”

The Centers for Medicare and Medicaid Services will be required to undertake demonstrations to align prices for certain drugs in both Medicare Part B and Part D with prices for the same drugs in other countries. High-cost drugs and biological products covered under Part B will be included in the demonstration. Part D drugs with limited competition and high beneficiary out-of-pocket costs will also be included. The proposals will require rule-making.

The International Pricing Index Model (IPI Model) for Medicare Part B Drugs proposed rule (Washington Highlights, Jan. 10, 2019) that focuses on prices for high-cost Part B drugs has been under review at the Office of Management and Budget for more than a year.

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