President Trump issues expanded Executive Order Aimed at Cutting prices of prescription Medicines, prior elections

By Dimitra S. Sotou, Senior Consultant

It’s been quite long since the US administration has been contemplating on techniques and mechanisms to lower prescription medicine prices covered by #Medicare .

Different ideas have been brought onto the table over the past year with the use of International Reference Pricing (#IRP) being the most discussed among others.

Should the industry start preparing ahead of time for the upcoming reforms?


The journey until present

About a year ago, the US government started considering the introduction of International Reference Pricing (#IRP); At the time, the proposed change was supposedly only applicable to physician-administered therapies (covered by Medicare Part B) but not outpatient drugs (covered by Part D).

Later, around end of 2019, the U.S. House passed an ambitious bill to lower medicine prices overall; the so-called: Lower Drug Costs Now Act , which GPI has analysed in an earlier post.

Thus far, there have been mixed receptions on the Act, with experts saying it could save billions of dollars in spending reductions for Medicare; however, it could negatively impact the number of innovative drugs coming to the market.

On Sunday, September the 13th, President Donald Trump issued an expanded executive order aimed at lowering the cost of Medicare-paid prescription medicines, with the pharmaceutical industry immediately criticizing it. The order is intended to apply to #Medicare Part D (outpatient medicines) as well as Part B therapies (physician-administered therapies) .

Coming just weeks before the general election, the new expanded order essentially directs the #HSS secretary to begin the process of creating demonstration projects (which would take time to implement) requiring Medicare to pay the same price for prescription medicines as those sold in Europe and other developed nations, which traditionally have secured lower prices.

According to Whitehouse website, 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” is defined as 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.

President Trump has now made this executive order a centerpiece of his campaign for re-election.

On the 24th of July, the Trump administration had released four new executive orders, intending to reduce drug costs for Medicare Part B treatments, before the November election; with a deadline to go into effect on August 24th ”if manufacturers did not take steps to lower their prices.”

But the deadline came and went… Following, last Sunday, President Trump revoked the July 24th order and issued a new, expanded directive that also covers the Medicare Part D treatments.

Not coming as a surprise, PhRMA and BIO have both condemned the order as “reckless,” with BIO threatening a legal challenge as well.

BIO’s CEO has heavily criticised the newest order as ”irresponsible” and ”unworkable” as well as ”threatening” towards ”America’s innovation leadership and access to medicines for tens of millions of seniors at risk.”


Dis-proportionally and profoundly high healthcare costs in the US are an issue that requires addressing and thoughtful consideration.

However, it is questionable whether introducing IRP would lead to lower patient expenditure and greater transparency of the healthcare system; and whether drastic measures are the ultimate solution.

What’s left to wait for?

Other reforms that are being proposed, such as introduction of value-based pricing or greater use of real-world evidence, might provide a better solution to problems ailing US healthcare.

What remains is to observe the general election results and what promises will eventually become actions.


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