President Donald Trump has announced his intention to sign an executive order on Monday aiming to reduce certain medication costs. This revisits an initiative from his presidency’s early days, a topic he’s advocated even before taking office.
The proposed order would have the Department of Health and Human Services set Medicare payment rates for medications administered in physicians’ offices to match the lowest prices paid internationally.
On Sunday, Trump took to his social media platform, stating, “I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the nation with the lowest cost anywhere in the world,” and committed to signing the directive on Monday at the White House.
“Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before,” Trump added.
His proposal would likely only impact certain drugs covered by Medicare and given in an office – think infusions that treat cancer, and other injectables. But it could potentially bring significant savings to the government, although the “TRILLIONS OF DOLLARS” Trump boasted about in his post may be an exaggeration.
Medicare provides health insurance for roughly 70 million older Americans. Complaints about U.S. drug prices being notoriously high, even when compared with other large and wealthy countries, have long drawn the ire of both parties, but a lasting fix has never cleared Congress.
Under the planned order, the federal government would tie what it pays pharmaceutical companies for those drugs to the price paid by a group of other, economically advanced countries – the so-called “most favored nation” approach.
The proposal will face fierce opposition from the pharmaceutical industry.
It was a rule that Trump tried to adopt during his first term, but could never get through. He signed a similar executive order in the final weeks of his presidency, but a court order later blocked the rule from going into effect under the Biden administration.
The pharmaceutical industry argued that Trump’s 2020 attempt would give foreign governments the “upper hand” in deciding the value of medicines in the U.S.. The industry has long argued that forcing lower prices will hurt profits, and ultimately affect innovation and its efforts to develop new medicines.
Only drugs on Medicare Part B – the insurance for doctor’s office visits – are likely to be covered under the plan. Medicare beneficiaries are responsible for picking up some of the costs to get those medications during doctor’s visits, and for traditional Medicare enrollees there is no annual out-of-pocket cap on what they pay.
A report by the Trump administration during its first term found that the U.S. spends twice as much as some other countries in covering those drugs. Medicare Part B drug spending topped $33 billion in 2021.
More common prescription drugs filled at a pharmacy would probably not be covered by the new order.
Trump’s post formally previewing the action came after he teased a “very big announcement” last week. He gave no details, except to note that it wasn’t related to trade or the tariffs he has announced imposing on much of the world.
“We’re going to have a very, very big announcement to make – like as big as it gets,” Trump said last week.
He came into his first term accusing pharmaceutical companies of “getting away with murder” and complaining that other countries whose governments set drug prices were taking advantage of Americans.
On Sunday, Trump took aim at the industry again, writing that the “Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the ‘suckers’ of America, ALONE.”
Referring to drug companies’ powerful lobbying efforts, he said that campaign contributions “can do wonders, but not with me, and not with the Republican Party.”
“We are going to do the right thing,” he wrote.
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