White House Releases Executive Order on Drug Pricing

Today, the White House issued an executive order (EO) aimed at reducing the costs of U.S. prescription drugs by tying prices to what other nations pay for their medications.

The EO does not have any immediate policy impact, but does direct the Department of Health and Human Services (HHS) and other agencies to take the following steps:

• Establish Most Favored Nation (MFN) Pricing: Within 30 days, HHS, in conjunction with the Centers for Medicare & Medicaid Services (CMS) and other federal agencies, will present “price targets” to drug manufacturers that reflect the prices paid for those drugs by comparably economically developed nations. If manufacturers fail to meet those targets, the EO directs HHS to begin a rulemaking process to impose MFN pricing. The EO does not provide details about the structure of an MFN plan, but it could resemble the International Pricing Index Model that CMS proposed, but did not finalize, during President Trump’s first term in office.
• Address Low Prices in Foreign Countries: The EO directs the Department of Commerce, the United States Trade Representative, and the Federal Trade Commission to address actions taken by foreign countries to suppress the price of medications below fair market value for their citizens. The EO grants wide discretion to agencies to address the price differential between the medications in the United States and similar economically developed countries. The EO suggests agencies consider allowing importation for certain drugs; exploring export restrictions for pharmaceuticals and precursor materials such as active pharmaceutical ingredients that contribute to lower foreign costs; and investigating possible anticompetitive behavior.
• Direct-to-Consumer Sales of Medications at MFN Price: The EO also includes a novel policy — increasing the scope of direct-to-consumer sales of medications for drugs made available at MFN prices. It is unclear which drugs would be eligible, or whether direct-to-consumer sales would be covered by Medicare and Medicaid.  HHS will likely have to undertake formal rulemaking to implement the policy.

ASHP will update members as the implementation of the EO progresses.