Trump officials preparing to move forward with major step to lower Medicare drug prices

The Trump administration is preparing to move forward with a major proposal to lower drug prices and rulemaking could come as soon as this week, according to people familiar with the effort.

The move, fiercely opposed by the pharmaceutical industry, would implement President Trump’s “most favored nation” proposal and lower certain Medicare drug prices to match prices in other wealthy countries.

Trump issued an executive order in September calling for steps to that effect, but it was unclear whether the administration would still go forward with implementing the proposal, especially given the election and a coming change in administration.

Sources said that while plans can always change at the last minute, the administration is preparing to take the regulatory steps to implement the idea as soon as this week and that it is likely to take the form of an interim final rule, meaning it will skip some of the steps in the regulatory process and go forward faster.

Asked about the plans, a spokesperson for the Department of Health and Human Services said “we don’t have any announcements at this time.” A White House spokesperson did not immediately respond to a request for comment.

Trump’s actions would be sure to set off a backlash from drug companies, possibly including lawsuits to try to stop the rule.

Many congressional Republicans also oppose the proposal, warning that it veers from traditional GOP free-market principles and instead constitutes “price controls.”

In a twist, though, the proposal is similar to ideas proposed by Democrats to lower drug prices, increasing the odds that the incoming Biden administration would choose to continue the program if it’s implemented.

Any proposal would take time to set up, so it is unclear when drug prices would start going down. The move would also only affect people who get their prescription drugs through Medicare, not people who have insurance through their jobs, for example.

Trump has long railed against high drug prices, but none of his major proposals have taken effect. This proposal would be his most sweeping move on drug prices.

“Just signed a new Executive Order to LOWER DRUG PRICES!” Trump tweeted in September. “My Most Favored Nation order will ensure that our Country gets the same low price Big Pharma gives to other countries. The days of global freeriding at America’s expense are over and prices are coming down FAST!”

While the details of the regulation remain to be seen, the executive order proposed lowering Medicare drug prices to more closely match the lower prices in other wealthy countries that make up the Organization for Economic Cooperation and Development. It is also unclear whether the rules will apply to drugs in just Medicare Part B or Medicare Part B and Part D.

On a separate drug pricing front, a rule to eliminate rebates that drugmakers pay to pharmacy benefit managers, in a bid to simplify the pricing system and lower out of pocket costs for patients, could also come before President-elect Joe Biden takes office. The rule went to the Office of Management and Budget for review on Friday, an online government dashboard shows.

That proposal is supported by the pharmaceutical industry but opposed by pharmacy benefit managers, the companies that negotiate prices with drugmakers and receive the rebates. The Pharmaceutical Care Management Association (PCMA), which represents those companies, pointed to projections that eliminating rebates could increase premiums and government spending, and threatened to sue. 

“If this rule is finalized as originally proposed, PCMA will explore all possible litigation options to stop the rule from taking effect and destabilizing the Medicare Part D program that millions of beneficiaries and people living with disabilities rely on,” the organization said.

The combination of the two different possible drug pricing rules in the closing days of the Trump administration would mean that officials are going out with a burst of moves on a front where action was stalled for much of Trump’s presidency.

Trump first announced a version of the most favored nation proposal in 2018, shortly before the midterm elections, but the proposal went nowhere.

Given this history, there is still the possibility that plans could change at the last moment. But if the administration goes forward with the rules, it would show that they are willing to push to enact them even in the closing days of Trump’s presidency.

But the approach taken by the administration could open the proposed rule to legal challenges.

Fast-tracking the proposal through an interim final rule, rather than the normal process of first doing a proposed rule and gathering comments, could make it easier for drug companies to win their lawsuits seeking to stop the proposal.

“In the last weeks of the administration, [Health and Human Services] Secretary [Alex] Azar seems inclined to try to move this and other rules forward in a way that creates much more legal jeopardy for them than is necessary,” tweeted Rachel Sachs, a health law professor at Washington University in St. Louis.

Updated at 3:44 p.m.