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Trump Issues Expansive Order Aimed at Lowering Drug Prices

Politics|Trump Issues Expansive Order Aimed at Lowering Drug Prices

The order expands on a presidential promise by trying to reduce the prices Medicare pays for prescription drugs, but experts said it was unclear whether the White House could carry out the directive.

Credit…Doug Mills/The New York Times

WASHINGTON — President Trump on Sunday issued a far-reaching executive order aimed at lowering the cost of prescription drugs, but the pharmaceutical industry immediately denounced it and experts said it was unclear whether the White House could carry it out.

The order belatedly makes good on — and expands upon — a promise Mr. Trump made at a July 24 White House signing ceremony, though it has no immediate effect. It directs the health secretary to begin the process of creating demonstration projects requiring Medicare to pay the same price for prescription drugs as those sold in Europe and other developed nations, which often have lower prices.

The process could take months, if not longer, and it would almost certainly be challenged in court.

The order covers all drugs paid for by Medicare — including those sold at pharmacies — and not just those administered in doctors’ offices, as the president initially announced.

“It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places,” the order says. “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.”

But it is unclear whether the White House has the authority to put the expansive order into effect. And in an odd twist, in calling for the secretary to set up the model programs, the administration is relying on its authority under the Affordable Care Act, which Mr. Trump and his fellow Republicans are trying to overturn in the Supreme Court.

In addition, Rachel Sachs, an associate professor of law at Washington University in St. Louis who covers prescription drug policy, reminded her Twitter followers on Sunday that “in December 2019, the House (led by the Democratic caucus) passed a bill that would’ve used international reference pricing to lower the price of drugs in Medicare.”

“Trump threatened to veto that bill,” she wrote.

Mr. Trump has made the executive order — and the war that has broken out with the pharmaceutical industry — a centerpiece of his campaign for re-election. At a July 24 signing ceremony, he said the directive would cover so-called Medicare Part B drugs — those like chemotherapy infusions that are administered in doctors’ offices.

The president said his order would go into effect on Aug. 24 if the drug makers did not take steps to lower their prices. But the deadline came and went. On Sunday, he revoked the July 24 order and issued a new, expanded directive that also covers so-called Medicare Part D drugs, those purchased at pharmacies.

“Just signed a new Executive Order to LOWER DRUG PRICES!” the president wrote on Twitter. “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…”

Pharmaceutical manufacturers staunchly oppose the executive order.

“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,” said Stephen J. Ubl, the chief executive of PhRMA, the industry’s largest trade group.

“What’s worse,” he added, “is that they are now expanding the policy to include medicines in both Medicare Part B and Part D, an overreach that further threatens America’s innovation leadership and puts access to medicines for tens of millions of seniors at risk.”

BIO, the biotech industry trade group, was equally outraged.

“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,” Dr. Michelle McMurry-Heath, the group’s chief executive, said in a statement.

The industry’s opposition to international index pricing is shared by many Republicans in Congress, who say they think adopting drug prices from countries where prices are set by the government is effectively importing socialism.

In an interview last month, Joel White, a Republican strategist, called it “really bad policy” because it amounted to “importing other countries’ price controls,” and “misguided” because it was targeted at medicines given in doctors’ offices or hospitals.

Sunday’s directive emerged from Mr. Trump’s announcement of four executive orders, all aimed at lowering drug prices in various ways, at the July signing ceremony. The first three were made public right away but require the Department of Health and Human Services to undertake a lengthy rule-making process before they will have any effect on drug prices.

At the time, Mr. Trump described the fourth order, the one he finally released, then revoked and supplanted with the expanded order on Sunday, as “the granddaddy of them all.”

Katie Thomas contributed reporting.


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