By Ken Perez, vice president of healthcare policy, Omnicell, Inc.
The cost of prescription drugs is one of the top reasons why the U.S. spends much more on healthcare on a per capita basis than economically similar countries. The general public understands this, as polls consistently show that high drug costs are the number one healthcare issue for Americans.
Congress certainly understands this as well, as there have been numerous attempts in recent years—many of which have garnered some bipartisan support—to slow the growth of prescription drug costs. However, the devil has been in the details, precluding passage of substantive legislation.
The inaction by the legislative branch led President Donald Trump to sign on July 24 four executive orders aimed at reducing drug prices and ensuring access to medications.
The first order directed federally qualified health centers to pass along discounts on insulin and epinephrine received from drug makers to medically underserved patients.
The second order allowed states to develop plans for safe importation of certain drugs, authorize the re-importation of insulin products made in the United States, and create a pathway for personal importation through the use of individual waivers to purchase drugs at lower cost from pre-authorized U.S. pharmacies.
The third order required that kickbacks between drug makers and pharmacy benefit managers be passed along to seniors as discounts in Medicare Part D.
The fourth order authorized the Centers for Medicare and Medicaid Services (CMS) to take action to ensure that the Medicare program and seniors pay no more for the most-costly Medicare Part B drugs than any economically comparable OECD country. (This concept was first introduced by the Trump administration as a rule in October 2018.)
Per the fourth order, on Nov. 20 CMS issued an interim final rule for the Most Favored Nation (MFN) Model that would lower prescription drug costs by paying no more for Medicare Part B drugs and biologicals than the lowest price that drug manufacturers receive in 25 other industrialized countries, normalized by GDP per capita.
While the MFN Model is only a proposal and is unlikely to be implemented due to procedural missteps, it and the other Trump executive orders do pave the way for the Biden administration to promote other initiatives intended to reduce drug costs, including allowing Medicare to negotiate drug prices, limiting launch prices for drugs, capping annual drug price increases to inflation, allowing consumers to buy drugs from other countries, and increasing the supply of generic drugs.
It is ironic that despite the unbelievably fierce and uncivil tone of the 2020 presidential election, Trump and Biden did not clash as much on the issue of prescription drug costs, thus establishing it as an area of common ground and potentially, some policymaking progress.