President Trump on Sunday signed an executive order moving Medicare one step closer to a “most favored nation” drug pricing system, instructing the government health care program for seniors to develop and test paying the same drug prices as other developed countries with cost controls.
“It is the policy of the United States that the Medicare program should not pay more for costly Part B or Part D prescription drugs or biological products than the most-favored-nation price,” Trump’s order declares.
The memo defines the most-favored-nation price as “the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organization for Economic Co-operation and Development.”
Trump’s approach is strongly opposed by the pharmaceutical industry and some conservatives who prefer the free market set competitive prices. But the president has been arguing since 2018 that U.S. senior pays far higher prices because drug makers off-load the development costs on Americans while providing discounts in foreign countries with cost controls.
“Americans pay more per capita for prescription drugs than residents of any other developed country in the world,” the president’s order said. “It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places. Other countries’ governments regulate drug prices by negotiating with drug manufacturers to secure bargain prices, leaving Americans to make up the difference — effectively subsidizing innovation and lower-cost drugs for the rest of the world.”
Trump crowed about his order Sunday afternoon in a tweet. “My Most Favored Nation order will ensure that our Country gets the same low price Big Pharma gives to other countries,” he wrote. “The days of global freeriding at America’s expense are over … and prices are coming down FAST!”
Just signed a new Executive Order to LOWER DRUG PRICES! 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…— Donald J. Trump (@realDonaldTrump) September 13, 2020
PhRMA, the drug maker’s main lobby group, immediately decried the action as “irresponsible and unworkable,” signaling a future showdown in the courts.
Trump’s plan “will give foreign governments a say in how America provides access to treatments and cures for seniors and people struggling with devastating diseases,” the drug lobby argued.