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Trump Order Tying Drug Costs to Other Countries Thin on Metrics

Sept. 15, 2020, 7:02 PM

Tying Medicare drug reimbursements to prices charged in other countries is supposed to improve patients’ health, according to the Trump administration, but it hasn’t defined what success would look like.

President Donald Trump’s most recent executive order is the latest effort to bring down the cost of medications and save Medicare money. The order unexpectedly included drugs that Medicare beneficiaries buy at the pharmacy counter, known as Part D drugs. When Trump first announced these sweeping policy changes two years ago, the international pricing policy only applied to costly drugs that must be administered in doctors’ offices, known as Part B medications.

Adding pharmacy drugs is meant to test whether paying a lower price would “mitigate poor clinical outcomes” associated with high drug costs, according to the order. However, it isn’t clear what would be considered “poor” outcomes and how they connect to prices.

Educated Guess

The Health and Human Services Department didn’t provide any more specifics. The agency said it doesn’t comment on the rulemaking process. That leaves industry participants in a guessing game about how the government will assess the relationship between drug prices and patients’ health. The HHS could implement the order through one or a series of regulations.

“To draw a line of price and bad outcomes, there are so many lily pads in the frog pond that you have to jump to to get from one to the other,” Robert Dubois, a doctor and interim president and CEO of the National Pharmaceutical Council, said.

High costs could force some Medicare beneficiaries to skip their medications, leading to more hospitalizations or emergency room visits, Stacie Dusetzina, a drug policy researcher at Vanderbilt University, said. That could be one way the administration gauges the success of its policy.

To connect those outcomes to price, “you can look at how prescription fill rates change when the drug’s price has increased over time,” Michelle Mello, a Stanford law professor, said. “A simpler version would just be to show that some proportion of prescriptions for expensive drugs go unfilled or are not refilled on time,” she said, which suggest beneficiaries can’t afford them.

However, the price the government pays may not be the biggest factor in patients skipping medications, Dubois said. While Medicare Part D dictates what kinds of drugs have to be available in plans, the deductibles beneficiaries actually pay vary by plan. High deductibles could be a much bigger factor than the price Medicare pays, he said.

Linking Drug Efforts

Trump’s order also links its existing efforts to control pharmacy drug prices and curb costs of the pricey medications administered in doctors’ offices. Yoking the two together could be risky if the administration attempts to address all of the pricing concerns in a single rule, Dusetzina said.

Medicare drugs administered in a doctor’s office or hospital have a set rate, and patients generally are responsible for 20% of the cost of those Part B medicines after paying a deductible.

Medicare has less control over the prices of drugs purchased at pharmacies than those administered by doctors, Dusetzine said. The head of the federal health department is specifically forbidden from interfering in negotiations with manufacturers, pharmacies, and plans or creating a “price structure for the reimbursement of covered part D drugs.”

The drug industry has hinted it might sue over any drug pricing rules the Trump administration issues that connects prices to foreign countries. The head of the Biotechnology Innovation Organization said the group would use whatever tools available, “including legal action if necessary,” to push back against the policy.

With the drug industry poised to challenge any eventual rule, the latest order could be a ploy to force them back to the negotiating table, said Robin Feldman, a professor at the University of California Hastings College of the Law in San Francisco who specializes in pharmaceutical pricing and competition.

The pharma industry and the administration have been at odds over pricing mechanisms since the beginning of Trump’s presidency. “Expanding the executive order to cover drugs purchased at the pharmacy may be designed to increase the pressure,” he said.

To contact the reporter on this story: Jacquie Lee in Washington at jlee1@bloomberglaw.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com; Andrew Childers at achilders@bloomberglaw.com

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