With just over three months before the U.S. elections in November, President Donald Trump is making a last-ditch effort to stamp his name on a drug pricing deal that has eluded him over his first three years in office.
A slate of four executive orders, announced by Trump on Friday, revive previously attempted drug pricing restraints that have languished politically. While the orders signal a renewed push, the barriers to achieving their aims are no lower than they have been in the past.
Trump's carrot-and-stick approach — threatening to move ahead with a punitive plan to use overseas prices as a benchmark for Medicare — is intended to drive pharmaceutical executives to agree to something that Trump can take to the campaign trail as he seeks re-election. The Medicare "international price index" proposal, first mooted as policy in the fall of 2018, was the focus of one of the four orders unveiled Friday.
The risk for the White House as it sets up an ultimatum is that big pharma could gamble to run out the clock on the political year as the Nov. 3 elections loom, a risk that became clearer on Monday when executives reportedly refused to attend the meeting. With divisions in the Senate Republican caucus impeding Congress' ability to send the White House any legislation, drug industry executives have the luxury of knowing that the only likely price restrictions will come from the Trump administration.
Pharma, meanwhile, risks the White House and the Senate potentially changing hands because of the election, an outcome that would increase the chances of the House Democrats' far-reaching drug pricing bill becoming law. If the executives calculate such a sweep could happen, a deal with Trump may be preferred.
The price index proposal is the only one from Friday's announcement that won't be implemented immediately. Instead, the Trump administration aims for it to take effect Aug. 24, unless pharma executives make a deal with the president. This plan was intended to give executives a firm deadline, but that strategy appears to have backfired on the White House.
Pfizer CEO Albert Bourla, speaking today on a company earnings call, said the request for a meeting was poorly timed, given that the biopharma sector's priority is developing vaccines and drugs to address the coronavirus pandemic.
"There's no need right now for a White House meeting," he said. "But I believe there is a need for a dialogue so we can move forward."
The president's leverage in getting a deal with the drug industry may be limited by resistance to the international pricing index even among Republican allies, not to mention the complexity of its implementation and its vulnerability to a legal challenge.
The proposal would seek to impose price limits on physician-administered drugs covered by Medicare Part B through a competitive process that would involve private companies acquiring drugs for health care providers. How an executive order would put this program, still in regulatory review, into place isn't clear. The White House did not release the order's text, meaning specifics may not be revealed until Aug. 24.
The pharmaceutical sector's objections, on the other hand, couldn't be more clear, not just by the refusal of the executives to show up but also the stridency of the response from its main lobbying group, PhRMA.
"This administration has decided to pursue a radical and dangerous policy to set prices based on rates paid in countries that he has labeled as socialist," Stephen Ubl, PhRMA's president, said in a July 24 statement.
Another executive order signed Friday puts in place a plan to allow for "reimportation" of lower-cost drugs sold in other countries, a concept that has been around for at least 20 years. The plan would allow states to import drugs from Canada and drugmakers to reimport and sell their own drugs intended for overseas markets.
The proposal, however, relies on Canadian pharmacies and drugmakers to participate in the plan to supply Americans lower cost drugs, which may not happen.
A third executive order would advance a plan to require pharmacy benefit managers to share with Medicare beneficiaries the rebates they negotiate from pharmaceutical manufacturers in the form of reduced cost sharing. The administration had pulled a proposed regulation on rebate-sharing because it was forecast to increase insurance premiums, an issue the executive order attempts to address by ordering the Department of Health and Human Services to confirm that it will not increase costs before implementing it.
The final executive order is similar to the rebate ban, but focuses on sharing with low-income patients the discounts for insulin and EpiPens provided to federally qualified health centers.