(Noted News) — On Sunday, President Donald Trump signed an executive order to lower the price of pharmaceutical drugs by pegging them to prices in other developed countries. This is an expansion on a set of executive orders from July 24 that Trump signed in an effort to combat rampant price-gouging in the pharma industry.
Originally, the White House wanted to wait to see if it could come to some sort an agreement with the pharmaceutical industry after the July 24 executive orders. On Sunday however, the White House implied they had come to no such agreement by expanding on the original executive orders.
Consequently, Big Pharma is not thrilled. Michelle McMurry-Heath, the CEO of the Biotechnology Innovation Organization, which is the largest organization representing the biotechnology industry, voiced her opinion.
“With scientists and researchers at America’s biopharmaceutical companies working around the clock to fight a deadly pandemic, it is simply dumbfounding that the Trump administration would move forward with its threat to import foreign price controls and the inevitable delays to innovation that will follow.”
“…We will use every tool available – including legal action if necessary – to fight this risky foreign price control scheme,”
Big Pharma’s largest trade group, the Pharmaceutical Research and Manufacturers of America, or “PhRMA”, also came down hard on the White House. CEO Stephen Ubl said in a statement:
“…The focus of any reforms must be on lowering costs for patients, ensuring patients’ access to medicines, addressing the misaligned incentives in the pharmaceutical supply chain and protecting the critical work being done to end COVID-19. Unfortunately, instead of pursuing these reforms the White House has doubled down on a reckless attack on the very companies working around the clock to beat COVID-19.
“The Administration has chosen to pursue the most favored nation policy – an irresponsible and unworkable policy that will give foreign governments a say in how America provides access to treatments and cures for seniors and people struggling with devastating diseases… “
One of the requirements of the executive order is that the secretary of Health and Human Services immediately test a payment model where Medicare pays “no more than the most-favored-nation price,” or the lowest price paid out of all the other OECD-member nations with comparable GDPs to the United States, which are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Israel, Japan, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom.
As it stands, the current Medicare system is divided into 4 parts: Parts A, B,C and D, each one designated for a different classification of health and pharmaceutical products and services.
The part that Sunday’s executive order primarily targets is Part B, which, among other things, covers pharmaceutical drugs.
Since taxpayers and seniors foot the bill, drug companies have been selling their patented products to Medicare for whatever price they want, usually resulting in Americans paying the highest possible price despite being the largest market for healthcare products. Combating this is the crux of Sunday’s order.
“In addition to being unfair, high drug prices in the United States also have serious economic and health consequences for patients in need of treatment. High prices cause Americans to divert too much of their scarce resources to pharmaceutical treatments and away from other productive uses. High prices are also a reason many patients skip doses of their medications, take less than the recommended doses, or abandon treatment altogether,” the order states.
Addressing the high costs of insulin and epinephrine is another focus of the White House’s executive orders. Federally Qualified Health Centers, or FQHCs, are clinics that are subsidized by the federal government and are supposed to serve lower-income populations in rural areas. These clinics provide drugs such as insulin and epinephrine at big discounts.
Unfortunately, a lot of providers and hospitals take advantage of the FQHCs by qualifying for certain programs and then buying up drugs at extremely low prices, and then sell them at much higher prices to unsuspecting patients. This practice should be impossible under Trump’s new order.
These orders come following growing awareness and criticism of Big Pharma’s business models, which have generally been defended or justified by the idea that they are part and parcel of a traditional free market.