Trump Signs Most Favored Nation Executive Order for Drug Prices

Posted: Sep 13, 2020 4:30 PM
Trump Signs Most Favored Nation Executive Order for Drug Prices

Source: AP Photo/Alex Brandon

President Trump signed an executive order on Sunday, part of his administration's ongoing efforts to lower drug prices for Americans. The president's "most favored nation" order seeks to lower the prices for prescription drugs and biologicals paid for through Medicare Part B by tying prices to those paid in developed countries. Critics of the order argue that it's a mistake to pin the cost of prescription drugs to foreign countries that utilize price controls and have distorted drug markets.

Specifically, the order pairs the drug prices to the lowest price paid by a member country of the Organization for Economic Cooperation and Development (OECD) with a per-capita gross domestic product that is comparable to the U.S. OECD is an international group consisting of 36 members states, including Canada, Sweden, the U.K., France, and Norway. 

"In most markets, the largest buyers pay the lowest prices, but this has not been true for prescription drugs," reads the order. "The Federal Government is the largest payer for prescription drugs in the world, but it pays more than many smaller buyers, including other developed nations."

American taxpayers, the order argues, should insist on paying the lowest price at which drugmakers sell the same drugs to other developed nations. 

"It is unacceptable that Americans pay more for the exact same drugs, often made in the exact same places," the order reads. "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.  The Council of Economic Advisers has found that Americans finance much of the biopharmaceutical innovation that the world depends on ... Americans should not bear extra burdens to compensate for the shortfalls that result from the nationalized public healthcare systems of wealthy countries abroad."

As noted in The Hill, President Trump signed four Executive Orders back in July regarding drug prices. The president has held off on implementing the most favored nation clause in an effort to allow the pharmaceutical industry time to develop its own proposal to bring down the cost of prescription drugs. 

"We’re going to hold that until August 24th, hoping that the pharmaceutical companies will come up with something that will substantially reduce drug prices," Trump said during the signing ceremony in July. "And the clock starts right now. So, it's August 24th at 12 [noon], after which the order on favored nations will go into effect."

Well, the deadline came and went with no apparent alternative from drugmakers.

During an interview with Prager University's Candace Owens, President Trump's former health care advisor, Katy Talento, said Americans have simply grown tired of the always increasing costs of health care. 

"It’s become so non-partisan. It used to be in health care Republican versus Democrat," Talento said. "Now it’s really just the health care swamp versus the rest of us."

The executive order signed on Sunday claims the need for affordable Medicare Part B drugs is more important now during the coronavirus pandemic, which caused the loss of 1.2 million jobs among Americans age 65 and older between March and April of this year.