Trump administration preparing executive order on drug pricing

The Trump administration is preparing an executive order aimed at lowering drug prices, according to sources familiar with the process.

President Trump is set to meet on Friday with key officials including Health and Human Services Secretary Tom Price and White House budget director Mick Mulvaney to discuss the order, which is expected to be issued in the coming weeks, possibly before the July 4 congressional recess, the sources said.

While there had been some concern that the changes would have a negative impact on the pharmaceutical industry, the policies under consideration are not considered to be drastic. The order being crafted could be an interim step towards more comprehensive reforms later. 

Executive orders can’t change or make laws, but they can be used to direct agencies to pursue certain regulatory actions. 

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One such policy under discussion could be to direct federal agencies to pursue value-based purchasing contracts for drugs. Value-based contracts require manufacturers and insurers to work together on payment for a drug based on how it performs.

Another policy that is under discussion would instruct agencies to pursue trade policies that would strengthen the intellectual property rights of pharmaceutical companies.

Such industry-friendly policies would be a dramatic departure from what President Trump promised on the campaign trail. During the 2016 campaign, Trump railed against the pharmaceutical industry and its prices, saying they are “getting away with murder.”

Trump also broke with his party in calling for Medicare to negotiate drug prices, as well as for the importation of drugs into the U.S. from abroad. Drug importation was rejected by both the Bush and Obama administrations.

Mulvaney caused a stir in health policy circles recently when he said on a panel at Stanford University that the administration was considering proposing that drug companies give discounts through rebates in Medicare the same way they do in Medicaid.

However, Trump would need action from the Republican-led Congress if he wanted to act on rebates, drug importation or Medicare price negotiations.

Price, though, was resistant to government action on drug prices as a lawmaker and could lead the process down a more traditionally Republican path of more restrained action, some observers think.