Administration Issues Executive Order Tying Medicare Drug Costs to International Prices

Merle M. DeLancey Jr.

On Sunday, while everyone was watching the return of NFL football, the Administration was busy fulfilling a promise it made in July to lower drug prices paid by the United States and Medicare beneficiaries by tying pricing to certain foreign countries.

In July, the Administration issued three Executive Orders concerning drug pricing and access to critical therapies. At that time, the Administration also announced that, unless the pharmaceutical industry proposed a plan that would decrease prices paid by Medicare Part B by August 24, the Administration would move forward with its own plan. Apparently, no agreement with the industry was reached because on Sunday the Administration announced its own plan.

In what is being called the “Most Favored Nations” Executive Order, the Administration is re-starting its efforts to reduce the prices the United States pays for drugs under Medicare Parts B and D. The Order uses the “most-favored-nation price” as the benchmark for prices to be paid by the United States. Most-favored-nation price is defined as the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a comparable member country of the Organisation for Economic Co-operation and Development (“OECD”).

Perhaps most surprising is the increased scope of the Order. The Order goes beyond what was proposed in July by seeking to link not only Medicare Part B drug prices but also Medicare Part D prices to lower prices paid by other countries. With respect to both Medicare Parts, the Department of Health and Human Services’ (“HHS”) “payment model” is to test whether poor clinical outcomes improve as a result of patients paying lower prices—no more than the most-favored-nation prices—for certain high-cost pharmaceuticals and biologics.

While the Order makes for a snappy sound bite, any potential benefits of lower drug prices will not be seen anytime soon. First, HHS will need to complete its rulemaking, which could have its own challenges. For example, in November 2018, HHS published an Advance Notice of Proposed Rulemaking (“ANPR”) proposing to implement an international reference pricing payment model for use by Medicare and Medicaid. Ultimately, nothing became of the ANPR. Even then, implementation of the contemplated programs is precarious. Industry opposition to the Order has been palpable and any HHS plan will likely face legal challenges that could substantially delay implementation.

States Pass Fewer Drug Manufacturer Pricing Disclosure Laws in 2018

Merle M. DeLancey Jr.

While the introduction of state legislation that would require drug manufacturers to disclose pricing and other information did not slow down in 2018, the number of bills that were made law did slow down. During 2018, 22 state legislatures considered bills seeking to require drug manufacturers to disclose pricing information; however, most of the legislation failed.

Two New State Laws

Since my Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update, two states—Vermont and New Hampshire—passed laws that arguably touch on requiring pharmaceutical manufacturers to report drug prices.[1] Continue reading “States Pass Fewer Drug Manufacturer Pricing Disclosure Laws in 2018”

Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update

Merle M. DeLancey Jr.

Earlier this year, I commented on state drug pricing transparency laws in effect and/or enacted during 2017.[1] I also opined that it was likely more states would pass similar transparency laws requiring drug manufacturers to disclose pricing and/or price increases during 2018. While proposed drug pricing transparency and disclosure legislation has been introduced and is pending in numerous states, during the first half of 2018 only two states (Oregon and Connecticut) passed new laws imposing price disclosure requirements on drug manufacturers. Maine expanded its existing disclosure law. Also of note was the United States Court of Appeals for the Fourth Circuit finding Maryland’s Anti-Gouging law unconstitutional. Continue reading “Drug Manufacturer Pricing Disclosures: Mid-Year 2018 Update”

2017 Was a Busy Year for State Imposition of Drug Manufacturer Price Disclosure Obligations and 2018 Isn’t Looking Much Better

Merle M. Delancey Jr.

Although several bills were introduced in Congress and President Trump has complained that drug prices are way too high, during 2017, the federal government did not pass any law nor implement any policy requiring drug manufacturers to disclose information concerning price increases. As a result, state legislatures have stepped in to fill this void. Unlike Congress, state legislatures have been much more aggressive in taking on drug price increases. Continue reading “2017 Was a Busy Year for State Imposition of Drug Manufacturer Price Disclosure Obligations and 2018 Isn’t Looking Much Better”