WASHINGTON — President Trump released an executive order Sunday that would drastically cut how much Medicare pays for virtually all of the drugs seniors take — the boldest move yet he’s taken to lower drug prices since taking office.
The policy vastly expands an older, controversial drug pricing policy that Trump has been teasing for months. Effectively, it will force drug makers to offer their medicines to Medicare at the same prices they do in other countries, as a so-called most favored nations policy. Where an earlier version would only have applied to Part B drugs, which are administered in doctors offices, the new version also applies to Part D drugs, which are sold in pharmacies.
The move could cost the drug industry billions and dramatically cut drug prices for most seniors. However, it’s unclear if Trump can implement the policy before the end of his first term. The Trump administration still hasn’t released formal regulations to implement the policy. That process typically takes months, if not years.
Sunday’s shocking move is also a sign of renewed tensions between the drug industry and the White House. The Trump administration had previously given the drug industry an ultimatum. Trump promised to not implement the most-favored nations policy if drug makers came up with alternative policies. But the Sunday release is a resoundingly clear sign that those negotiations have fallen apart.
The drug industry has also hinted it will sue to block the policy from being implemented — and that was before the industry saw the new, expanded version.
By issuing the new executive order, Trump is directing his health secretary to implement a policy whereby Medicare would not pay more than the lowest price for a drug that is offered in countries with comparable gross domestic product. It’s unclear, however, if the policy will be permanent: The executive orders direct the HHS secretary to test the ideas before making them permanent.
It’s still unclear when the Trump administration will formally implement the new executive order. Drug industry lobbyists expect Trump to try and skip over most of the formal regulatory steps by issuing a so-called interim final rule, a rare regulatory maneuver that lets president’s skip most of the formal regulatory steps in certain emergencies. However, the drug industry has hinted it will sue if Trump tries to use that maneuver.