July 24, 2019 / 10:43 PM / 2 months ago

Exclusive: White House preparing order that would cut drug prices for Medicare: sources

NEW YORK (Reuters) - U.S. President Donald Trump is considering a sweeping executive order that would cut prices on virtually all branded prescription drugs sold to Medicare and other government programs, according to two industry sources who had discussions with the White House.

FILE PHOTO: A pharmacist refills a container in a drug dispensing machine at the Rock Canyon pharmacy in Provo, Utah, U.S., May 9, 2019. REUTERS/George Frey

The order under discussion would be much broader than the Administration’s previously disclosed proposal to lower prices on physician administered, or Part B, drugs by tying prices to lower costs in other countries.

The administration is now looking at ways to use this or a similar method to lower prices in Medicare’s much larger Part D, which is for widely used prescription drugs patients take at home, such as for cholesterol and blood pressure, the sources said.

The White House declined to comment, and it was unclear how far along the any such plan was from being undertaken. The U.S. Department of Health and Human Services, also declined to comment.

Americans pay the highest prices for prescription drugs in the world as most other developed nations have single-payer systems in which the government negotiates drug prices for its people.

The U.S. government in 2016 spent around $29 billion on prescription drugs in Medicare’s Part B, which includes most injectable drugs, and nearly $100 billion in Part D, which covers as pills and other drugs usually dispensed in pharmacies.

Trump is also considering extending the pricing controls to the U.S. Department of Defense, which runs the Tricare health plan for military personnel and their families, as well as the Department of Veterans Affairs, the sources said.

Executive orders often go through various drafts and incarnations, and sometimes competing versions of the same order are floated within the Trump White House. In addition, some executive orders do not end up being signed.

The drug pricing executive order could come as soon as the next few weeks, the sources said.

U.S. Senators Chuck Grassley and Ron Wyden - the top Republican and Democrat on the U.S. Senate Finance Committee - earlier this week announced a proposal to lower prescription drug prices that could save $100 billion in costs to government healthcare programs.

The White House could delay the executive order if the Senate bill looks likely to garner bipartisan support, the sources said.

If implemented, the executive order could significantly increase the number of drugmakers whose sales could take a hit. AbbVie, Eli Lilly and Co and Pfizer Inc all have substantial exposure to Medicare Part D. Companies with major exposure to Part B include Merck & Co, Bristol-Myers Squibb Co and Roche

In early July, Trump said his administration was working on a drug pricing executive order with a “favored-nation clause, where we pay whatever the lowest nation’s price is.” Trump has called the lower prices paid by other nations “global freeloading.”

Trump, a Republican, has struggled to deliver on a pledge to lower drug prices before the November 2020 election. Healthcare costs are expected to be a major focus of the campaign by Trump and Democratic rivals vying to run against him.

The Trump administration earlier this month scrapped an ambitious policy that would have required health insurers to pass billions of dollars in rebates they receive from drugmakers to Medicare patients.

Also in July, a federal judge struck down a Trump administration rule that would have forced pharmaceutical companies to include the wholesale prices of their drugs in television advertising.

Reporting by Michael Erman and Carl O'Donnell in New York; Additional reporting by Roberta Rampton in Washington and Caroline Humer in New York; editing by Bill Berkrot

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