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White House Issues Executive Orders on Lowering Drug Prices

The White House on Friday issued four executive orders aimed at lowering prescription drug prices through various policy levers.

While the executive orders do not directly implement drug pricing policies, they call on relevant government agencies to take action to implement certain policies. These policies would include permitting importation and reimportation of certain drugs; prohibiting pharmacy benefit manager (PBM) rebates on Medicare Part D drugs; and requiring federally qualified health centers (FQHCs) to pass 340B Drug Pricing Program discounts to patients.

The first of these orders directs the Department of Health and Human Services (HHS) to complete the rulemaking process to end retrospective rebates to Medicare Part D PBMs, plan sponsors, and pharmacies. The HHS Office of Inspector General issued a proposed rule in February 2019 that would exclude these rebates from safe harbor protections under the anti-kickback statute; this proposal has been on hold since then. The executive order would create new anti-kickback statute safe harbors to allow discounts to patients at the point-of-sale.

A second executive order aims to allow the importation and reimportation of certain drugs by states, individuals, and pharmacies. Individuals would be granted waivers to allow the importation of needed prescription drugs if doing so would lower drug costs and not risk public safety.

The third order directs HHS to allow patients of FQHCs to purchase insulin and injectable epinephrine at the 340B discounted price. This policy would apply to uninsured patients, those who have a high unmet deductible, and those who have high cost sharing for insulin or injectable epinephrine. The order notes that HHS can implement this policy by conditioning federal grants to FQHCs on compliance with this requirement.

A fourth, yet unpublished, executive order would tie Medicare Part B drug payment to international drug prices. The Centers for Medicare & Medicaid Services issued an advance notice of proposed rulemaking in the fall 2018 that sought feedback on an international pricing index (IPI) model. The new executive order is likely to continue the rulemaking process toward creating such a model. Although the text is not yet public, the administration noted the order will have a 30-day delayed effective date to allow negotiations with drug manufacturers.

Contact Senior Director of Policy Erin O’Malley at eomalley@essentialhospitals.org or 202.585.0127 with questions.

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About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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