Keenan Briefings

Briefings

President Trump Signs Four Executive Orders Aimed at Lowering Prescription Drug Prices

July 28, 2020

On July 24, 2020, President Donald Trump signed four executive orders that focused on lowering prescription drug prices. All of these executive orders direct the Secretary of Health and Human Services (HHS) to make determinations and promulgate rules that would put the executive orders into effect. Therefore, these executive orders have no current impact on prescription drug pricing, commercial self-funded employer pharmacy programs or fully-insured group health plans.

Prescription Drug Re-Importation

This executive order directs HHS to, “as appropriate and consistent with applicable law,” act to expand access to imported prescription drugs from Canada and other countries by taking the following steps.

  • Facilitating individual waivers already available under the Federal Food, Drug, and Cosmetic Act (FDCA), provided such importation poses no additional risk to public safety. The risk to public safety is a high hurdle, considering that is the very reason drug reimportation is generally not allowed.
  • Authorizing the re-importation of insulin upon a finding by HHS that it is required for emergency medical care.
  • Finalizing the proposed rule to allow importation of certain prescription drugs from Canada. This rule, promulgated by HHS in 2019 but never finalized, would allow states, wholesalers or pharmacists to develop and submit to HHS for review pilot programs to import certain drugs from Canada that are versions of FDA-approved drugs and manufactured consistent with FDA approval. Again, safety is a hurdle for this rule.

Drug manufacturers have consistently fought against drug re-importation. Moreover, the Canadian Government has also rejected importation proposals, saying importation would deplete the country’s own supply of prescription drugs.

Pricing of Insulin and Injectable Epinephrine Through the 340B Program

This executive order requires HHS to take action to ensure that future grants to Federally Qualified Health Centers (FQHCs) are conditioned on the FQHC’s having established practices to make insulin and injectable epinephrine available at the discounted price paid by the FQHC grantee or sub-grantee under the 340B Prescription Drug Program to individuals with low incomes who have a high cost-sharing requirement for those medicines, have a high unmet deductible, or have no health insurance. This executive order is quite limited in scope. A FQHC is a clinic that provides comprehensive primary and preventive care to patients in under-served and rural areas. There are only about 1,368 FQHCs receiving federal grants under Section 330 of the Public Health Service Act. The executive order would not impact hospitals or clinics that are not FQHCs.

Rebate Pass-through to Medicare Part D Beneficiaries

If it goes into effect, this executive order will narrow the safe harbor for drug rebates under the federal anti-kickback statute, while still permitting plan sponsors, pharmacies and PBMs to apply discounts at the Medicare Part D beneficiary’s point-of-sale. Prior to taking this action, the executive order requires the Secretary of Health and Human Services to publicly confirm that the action is not projected to increase federal spending, Medicare beneficiary premiums, or patients’ total out-of-pocket costs. A Federal Government analysis of a similar proposal last year concluded that it could increase Medicare Part D premiums by 25-40% and that it would cost the Federal Government $177-$196 billion over ten years. In light of these costs, it is hard to see how HHS could confirm that the action will not increase federal spending or beneficiary premiums.

Index Pricing for Physician-Administered Drugs Under Medicare Part B

While the President announced this executive order, he has postponed moving ahead with it until August 24, 2020 to give pharmaceutical companies time to come up with an alternative pricing plan. It has not been published on the White House website, but as reported in the media, this plan had already been promulgated in proposed regulations in 2018 but never finalized. It would establish target prices for an as-yet undisclosed number of drugs under Medicare Part B. The target prices would be tied in part to an international pricing index (IPI), which includes the prices of the same physician-administered drugs in 15 other countries. If the plan moves forward, it is likely to be the subject of legal challenges as there is some question as to whether the Centers for Medicare and Medicaid Services (CMS) have the statutory authority to enforce such a rule.


Keenan & Associates is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Clients are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the clients’ business activities.