Trump Executive Order Wants Deeper Drug Price Cuts
In yet another sign President Donald Trump will keep the Medicare drug price law, he issued an executive order that strives to get deeper price reductions in the second year of negotiations (2025 for an effective date of 2027).
The executive order is general. But it does commit to evaluating ways to ensure prices drop more than the average 22% seen in the 2024 negotiations, increase transparency, increase generic introduction and penetration, further importation, and reform pharmacy benefits managers (PBMs) and other middlemen. It also indicates special programs would be set up for the low income. The order will solicit information from the public and stakeholders.
On the other hand, Trump also said the actions would minimize any negative impacts of the maximum fair price on pharmaceutical innovation within the United States. This likely could mean protecting certain small molecule drugs longer from negotiations, which is known as the “pill penalty.” But that could also mean some shortening of large molecule drug protection. Healthcare policy group KFF lays out the impact to the number of drugs negotiated and lost savings if small molecule drug protection is extended. As I have said in the past, I have some sympathy for drug makers on the small molecule issue in terms of parity in the law.
Some are speculating that the order could throw out the entire gross and net price system by eliminating rebates.
The special program could leverage grant conditions at community health centers and other similar groups to lower costs of drugs by passing through discounts received. Others predict that there will be new conditions placed on 340B hospitals as well to pass through drug price reductions.
In two other encouraging signs, the order requires an evaluation of site-neutral payment reform and whether Medicare payment is encouraging a shift in drug administration volume toward costly hospital outpatient departments. Further, the Department of Labor will issue new transparency requirements to ensure that pricing and other arrangements of PBMs are made clear to employer groups that are self-insured.
In other news, Mark Cuban’s Cost Plus Drugs will target drug shortages through an agreement with those in the injectable drug market.
Additional articles: https://www.healthcaredive.com/news/trump-drug-pricing-executive-order-ira-pill-penalty/745539/ and https://insidehealthpolicy.com/daily-news/trump-targets-ira-drug-negotiation-imbalance-new-eo-offers-few-details and https://insidehealthpolicy.com/inside-drug-pricing-daily-news/drug-pricing-eo-reveals-plan-build-cgt-access-model-medicaid and https://www.healthaffairs.org/content/forefront/administration-lays-out-drug-pricing-plan-through-executive-order and https://www.kff.org/policy-watch/the-effect-of-delaying-the-selection-of-small-molecule-drugs-for-medicare-drug-price-negotiation/ and https://insidehealthpolicy.com/inside-drug-pricing-daily-news/eo-leverages-340b-insulin-medicare-pay-address-site-neutral and https://www.beckershospitalreview.com/quality/pharmacy/mark-cubans-drug-firm-targets-injectable-shortages/
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https://www.fiercehealthcare.com/payers/trump-order-seeks-changes-medicare-drug-price-negotiation-program-pbm-reform