WASHINGTON — President Trump on Friday said his administration would soon issue an executive order mandating a “favored nations” policy in which U.S. payments for drugs are capped at the lowest price paid by either a manufacturer or a developed country.

“Why should other nations — like Canada — but why should other nations pay much less than us?” Trump asked. “We’re working on a favored nations law where we pay whatever the lowest nation’s price is.”

The phrase “favored nations” is sometimes used in contracts to ensure that a purchaser of a good or service receives terms at least as favorable as any other purchaser. In other words, the clauses ensure no one else gets a better deal than the “favored nation.”

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It was not immediately clear to what extent Trump’s announcement differs from one of the White House’s signature drug pricing proposals: an international price index that would similarly cap U.S. drug payments based on an average of prices paid in an index of developed nations.

That proposal, however, is only a pilot program, meaning it would only be tested until 2025 and would only apply to a subset of physician-administered drugs. The administration is also developing that proposal through the formal process for federal regulations, not through an executive order. Last month the administration moved to formally advance that proposal by submitting it to the White House’s budget office for review.

 

A Department of Health and Human Services spokeswoman said in a statement that the administration is “firmly committed to pursuing any and every solution — including importation and most favored nation policies — that will deliver real results and keep American patients safe.”

The spokeswoman referred further questions to a White House spokesman, who declined to elaborate.

While Trump has long fixated on the high cost of prescription drugs, his administration has yet to formally enact its most aggressive drug pricing reforms. The international price index proposal remains under review, and the administration has not finalized a separate administration proposal effectively eliminating most rebates paid by drug makers to pharmacy benefit managers.

A rule requiring drug companies to disclose list prices in television ads, however, takes effect later this month.

As Trump gears up for a reelection campaign in 2020, he has continued to cite high drug prices as an administration priority. Polling repeatedly shows health care costs as a top issue for voters across the country and shows drug manufacturers to be deeply unpopular.

While using payment caps derived from foreign prices has become a signature Trump administration push, health secretary Alex Azar warned lawmakers over a year ago that tying U.S. drug prices to overseas prices might cause companies to avoid foreign markets.

At a June 2018 Senate hearing, Azar said that he looked at the idea of giving the U.S. “favored nation” status, but said “I don’t think it would be effective” because companies could simply raise prices abroad to gain leeway in setting prices here.

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  • We need to evaluate, the cost to make the drug and than make sure its priced accordingly, don’t let them have such a huge markup.

  • Convince me that Donald Trump knew
    nothing of the comments above. And the job Sec G just left for a lucrative pharma
    Corp ?
    What a Mob!

  • Read Marcia Angell’s (former Editor of NEJM) book on the Pharma industry! They include cost of ADVERTISING in their R&D “budgets”. Basic research is paid by NIH, so the American People own the right to the original discoveries. The TRUE “R&D” leading to a marketable drug then follows, including massive advertising to consumers (totally inappropriate for prescription drugs which need a doc/NP/PA evaluation to be prescribed, not a TV viewer!! PROOF that cost has no bearing on drug prices is the absurd extreme increase in price for insulin, an old drug whose costs to produce have dropped dramatically over its decades of use. The Opiod industry is getting its due reward, at last, in court, but the abuse of the American consumer in the many other pharmaceuticals continues apace. This is people’s LIVES, folks, and deserves real action by Congress and the President.

    • While I agree that there’s a whole lot wrong with advertising in the pharma industry- and we should just ban advertising for prescription drugs entirely, as most other countries do- many companies also do basic R&D that’s not paid for by the NIH, and they also have to fund clinical trials, which are incredibly expensive.

  • Forty years as a Health Care Professional gave meaning to my life and giving of my skills to my practice. Five years beyond enveloped my work in recognition of insurance industry dominance of health practices, restrictions upon practice and the institutional development of America’s drug dependencies. The pharma industry, while making tremendous contributions, has simply replaced the M.O. of the corner drug dealer. So I left health care practice.

  • Such a lame-brained scheme, useful only for political consumption, would not lower the co-pay of a single patient for a single pill by one penny. All this shows is that the President doesn’t have a clue as to how the drug pricing ecosystem works. Will we now all pay higher prices for generic drugs to match the prices of “most favored” nations?

  • Drugs cost a lot to develop and one reason is FDA, yep the government but incremental expense of manufacturing the drug often is negligible. It is stupid to say that US consumers should pay what people in Egypt pay, maybe a more reasonable formula would be to index the price to GDP per capita. You also have to factor in that drug companies employ people here and a lot of what they pay recycles back to government in terms of income tax. One reason for explosion in medical cost is the demand brought about by baby boomers aging. Shove the executive order, watch out not to destroy a vibrant biotech industry, to get cure for so many diseases you need to spend.

    • This may be the most informed and insightful comment I’ve read on Stat. In fact, more informed and insightful to the full picture than what most STAT writers describe or understand (or what they DECIDE to write/cover because of some partisan/political/PR/media (Boston Globe complex…)

    • So much bullshit in your comment. US prices is still many many times more expensive than comparable western countries. They also need to go through the country’s (or EU’s) equivalent of FDA to get approval, so that is not something that is a US-only expense.

  • I’m a little confused. President Trump made a speech not to long ago in the
    Rose Garden of the White House along with Alex Azar by his side stating that
    the “Middlemen” ( The PBM’s) are making billions in profits and that this was going to stop. Now you never hear him saying anything about this. Both of these
    top legislators knows that the PBM’s are the problem, yet there’s not a word.
    I guess PCMA’s deep pockets got to these guys too !!!

    • Trump does whatever he thinks will portray him in the best light. This has been his MO for the last 3 years.

      If we have another republican president, I hope that it isn’t Trump. Though it might not make a difference. So many republican have gone more and more to the far right.

  • Trump never ceases his ridiculous populist pandering. The US des not need a POTUS, nor a Congress either. The govt. runs itself through a deep state zio-matrix.

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