The plan, known as the most-favored nations rule, would link government payments for medicines to lower prices paid abroad. It could cut Medicare drug payments by as much as 30 percent, lopping off a chunk of pharmaceutical companies’ profits in one of their largest customer pools.
It’s also part of a broader White House effort to deliver on Trump’s signature 2016 campaign pledges — in this case, lowering drug prices — before he leaves office in January.
Trump first floated the plan in May 2018, denouncing “foreign freeloaders” for jacking up prices paid by Americans. But momentum for the idea quickly died down amid swift opposition from drugmakers and criticism from several Republicans who likened the idea to importing price controls from other countries that, unlike the United States, take an active role in setting drug prices.
The White House then used the international-pricing plan in subsequent efforts to pressure the drug industry, including an attempt this summer to extract price cuts from the industry before the election. Officials revived the model again last week, initially intending to issue it as a proposed rule as part of Trump’s broader drug-cut agenda, as The Hill first reported.
It’s all but certain that the pharmaceutical industry will challenge the White House’s latest decision to issue the policy as an interim final rule — without soliciting and sifting through thousands of industry and public comments over several months.
Spokespeople for the White House, HHS and the Centers for Medicare and Medicaid Services did not respond to requests for comments.
With roughly two months left in the Trump presidency, lawsuits could easily stall the measure until President-elect Joe Biden assumes office.
Administration officials involved in the drug-pricing effort also have questioned the legal justification for speeding up the process.
“Leaving office and not having time to go through the right process, like a proposed rule, does not an emergency make,” said one HHS official who’s been briefed on the plan.
The president revived the 2018 plan with an executive order this summer that dubbed it the “most-favored nations” rule. While the original approach focused only on physician-administered drugs in Medicare Part B, Trump in August ordered officials to eventually extend the move to medicines bought at the pharmacy counter in Part D — encompassing virtually every major drug sold to consumers.
The latest version would be structured as a seven-year Medicare demonstration and as a mandatory model, three officials said, tying U.S. prices for affected drugs to those paid in a group of developed countries. But according to two of those sources, it would only affect Medicare Part B. That means it would have a minimal impact on Pfizer, where pharmacy-counter medicines covered under Part D drive significant revenue.
It’s not clear how the Biden administration would deal with such massive, last-minute Medicare overhauls. Biden has discussed establishing an independent review board to assess medicines’ values, another approach borrowed from European countries.
The most-favored nations rule and another proposal to eliminate rebates that drugmakers pay to pharmacy benefit managers could be Trump’s final legacy in his bid controlling drug costs, once a key campaign promise and fixture of State of the Union addresses. While price hikes for prescription medicine slowed in recent years, costs did not drop and other key proposals — such as a requirement to list prices in direct-to-consumer ads or a pathway for states to import cheaper medicines from Canada — never took flight.
“I’m cutting drug prices. I’m going with favored nations, which no president has the courage to do, because you’re going against Big Pharma,” Trump said during the first presidential debate against Biden.
The president-elect fired back: “He has no plan for health care. He hasn’t lowered drug costs for anybody.”
Adam Cancryn contributed to this report.