Trump directives to rearrange drug pricing land with a thud

Little hope for a flurry of executive orders that revive drug importation and rebate transactions in Medicare


On July 24, President Trump held a ceremony to sign four executive orders affecting drug pricing, distribution and reimbursement, but commentary was nearly immediate that the orders would have little near-term effect, amounting, as one industry expert put it, to “political theatre” in the runup to the fall election.

One of the orders, “Access to Affordable Life-saving Medications,” may make a near-term difference to some people, some of the time, for two drugs: insulin and epinephrine pens. The order requires Federally Qualified Health Centers (FQHCs—a small subset of the providers who run 340b discount programs) to pass their reduced pricing for those drugs on to low-income, uninsured patients. It’s a gesture to address the situations where the rapidly growing 340b program generates savings for healthcare providers (generally, hospital pharmacies), but only indirectly for indigent patients.

Another executive order, “Lowering Prices for Patients by Eliminating Kickbacks to Middlemen,” is a new effort to revive a failed attempt to ensure that the rebates collected by pharmaceutical benefit managers (PBMs) flow through to the prices that patients pay. This idea was floated in Trump’s 2018 “Blueprint to Lower Drug Prices,” but a year later the rebate-reform portion was dropped. PBMs like managing rebate programs, and payers like getting some of the rebate money returned to them, ostensibly to lower insurance premiums. The executive order instructs HHS to develop new rebate policies for Medicare; that process can take months to years before becoming effective.

The importation idea—again
A third order, “Increasing Drug Importation to Lower Prices,” brings up another Blueprint idea that has been kicking around Washington for many years. This time, Trump is pushing for HHS to begin “facilitating” waivers on the importation prohibition—something several states have initiated as well. The order also specifies bringing in insulin “upon a finding by the Secretary that it is required for emergency medical care”—presumably at a lower cost.

Importation (also known as “reimportation”) would allow drugs from other countries (usually, the target is Canada) to be brought into the US without direct FDA oversight. FDA did issue a Notice of Proposed Rulemaking on this in December 2019, but nothing has happened since the comment period closed.

The White House ceremony included Florida’s Governor Ron DeSantis, where that state passed a law a year ago to begin an importation program. As of June 30, the state’s Dept. of Health issued a solicitation for a vendor to manage the program, and a vendor selection will occur in mid-December.

The fourth order was only hinted at by Trump, who said it is on hold for a month pending pharma industry response. Yet another idea floated in the Blueprint, it will establish some form of reference pricing, whereby US Medicare or Medicaid drug prices will be mandated or negotiated based on some non-US pricing regimen. In the past, this was described as a basket of various international prices but for now the details are up in the air.

There is an official transcript of Trump’s remarks as he signed these orders, and it’s a breathtaking ramble through facts, factoids and fabrications. “We strongly defended Medicare and Social Security, and we will always protect — and we have been protecting, and we always will — protect Republicans” is arguably the most eye-popping statement. Nearly all the press reports about the executive orders ignored Trump’s statements—wisely so—but there’s considerable entertainment value in the commentary of what ought to be significant actions on US drug policy.