Yesterday, President Trump announced four executive orders that, if ever implemented, could “completely restructure the prescription drug market”—including foreign price controls that could hurt companies working to eradicate COVID-19 and reduce patient access to lifesaving treatments.
Trump announced one executive order with what he calls a “most favored nation” pricing scheme. While no details have been made public, it apparently would require Medicare Part B to test a reimbursement model under which prescription drugs would be paid at the lowest price available in any OECD country.
The goal,Trump said, is to “end global freeloading on the backs of American patients and American seniors.”
It’s more extreme than the International Pricing Index (IPI) proposed in 2018—closer to the foreign price controls in Speaker Nancy Pelosi’s drug pricing bill (H.R. 3), which the president’s own economic advisers said would reduce pharmaceutical revenues by as much as $1 trillion over the next decade and lead to 100 fewer drugs due to less investment in R&D.
As we explained yesterday, if ever implemented, it would harm patient access to lifesaving treatments. The absence of price controls in the U.S. leads to more and newer medicines available sooner to Americans. Of the 74 cancer drugs launched between 2011-2018, 95% are available in the United States, compared with 74% in the UK, 49% in Japan, and 8% in Greece.
Yes, other countries should pay their fair share for biotech innovation—but this goal should be pursued through trade agreements and other avenues, not by importing foreign price controls that will harm American innovation.
However, the executive order has not been published yet. The administration is giving the pharmaceutical industry some time to propose alternatives. "If these talks are successful, we may not need to implement [the order],” Trump said. And Trump’s legal authority to even do this is highly suspect, with court challenges expected.
He also signed three additional executive orders to do the following:
- Require Federally Qualified Health Centers to pass discounts on insulin and EpiPens directly to patients.
- Allow states, wholesalers, and pharmacies to import prescription drugs from Canada, and “facilitat[e] grants to individuals of waivers of the prohibition of importation of prescription drugs.”
- Eliminate legal shields for rebates paid by drug manufacturers to middlemen and insurance plans, and allow plan sponsors, pharmacies, and PBMs to apply discounts at the patient’s point-of-sale.
What’s next? BIO President and CEO Dr. Michelle McMurry-Heath sent a letter to President Trump explaining why foreign price controls would harm patients and cures. BIO will continue to advance reforms that will truly help patients and that are grounded in market competition—the hallmarks of America’s world-class biomedical innovation system.
Watch Dr. McMurry-Heath talk about the EO and what it means for future cures:
