Advocacy & Practice Updates — Advocacy & Practice

Executive Order Seeks to Peg Medicare Drug Prices to Lowest Paid in Other Countries

This week, the White House released the long-awaited executive order, “Lowering Drug Prices by Putting America First” that seeks to lower drugs prices paid by Medicare by pegging them to lower prices paid in other countries. The executive order was first announced in July 2020, but not released to give the pharmaceutical industry time to develop its own pricing plan. Without a plan from the drug industry, the administration went forward with the executive order, also known as the “Most Favored Nation Price Plan” on Sunday. 

Specifically, the order directs the Department of Health and Human Services (HHS) to begin the rulemaking process to develop separate demonstration projects: one targeted at Part B drugs and the other at Part D drugs. These demonstrations would seek to pay no more for a drug than the lowest price paid by a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product to the US. The Part B demonstration would include all Part B drugs, while only drugs with “insufficient competition” and that are priced lower in OECD countries would be included in the Part D version. 

The executive order goes further than the previously proposed International Price Index (IPI) in that it includes both Parts B and D drugs and pegs the Medicare price to the lowest international price, rather than a composite or average price paid by a small group of developed countries. The executive order does not provide details of the demonstration projects or how physicians will obtain or be reimbursed for the drugs, like the IPI did. As a reminder, the IPI proposal included a competitive acquisition program (CAP) for Part B drugs, which ASRS expressed concerns with based on failed earlier attempts. We will keep you updated as additional details become available related to the demonstrations included in the executive order. 

(Published 9.16.20)

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