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Executive Order To Lower Medicare Drug Prices

On September 13, 2020, President Donald Trump signed an executive order that aims to lower drug costs for Medicare recipients.

The action comes nearly two months after the President signed a separate order, which directed the Secretary of Health and Human Services (HHS) to take necessary steps to deliver lower costs on prescription drugs for American patients.

Prompting quick condemnation from the drug industry, this more recent executive order expands on the previous version and instructs the HHS to examine a payment scheme where Medicare pays “no more than the most-favored-nation price” — referring to lower prices paid by other developed nations. The order will apply to both Medicare Part B and Part D drugs and will not affect drug prices beyond those paid by Medicare recipients.

Drug manufacturers have initiated heavy resistance to the order, as lowering drug prices will inevitably impact their profits. As for what is ahead, the HHS secretary will need to explain additional policy details and test pricing models — the same models that manufacturers claim will stifle innovation and allow foreign countries to have the advantage over American drug prices.

With this executive order, this is only the beginning of what could be a lengthy process potentially resulting in Medicare prices being lowered.

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