Trump announces series of executive orders aimed at lowering drug costs

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President Donald Trump announced Friday he will sign four executive orders aimed at lowering the high cost of prescription drugs in the United States in what he said would make sweeping changes to the prescription drug market in the U.S. if they are finalized.

The orders, which are subject to the regulatory review process, are designed to bring U.S. drug prices at least on par with their costs overseas. Trump said Americans often pay 80% more for prescription drugs than Germany, Canada and other nations for some of the most expensive medicines. 

“The four orders I’m signing today will completely restructure the prescription drug market in terms of pricing and everything else to make these medications affordable and accessible for all Americans,” Trump said at the White House. “Under my administration, we’re standing up to the lobbyists and special interests and fighting back against a rigged system.”

The first order targets high insulin prices, requiring federal community health centers to pass discounts they receive on the drug and EpiPens directly to patients. Trump said those providers shouldn’t receive those discounts while charging their patients “massive, full prices.” 

The second order would allow states, pharmacies and wholesalers to import drugs from Canada where they typically cost less than in the U.S. In most circumstances, it is illegal to import medications from other countries for personal use, according to the Food and Drug Administration. 

The pharma industry and regulators have said importing drugs could threaten consumer safety. Supporters, including Sen. Bernie Sanders, say importing drugs from other countries would increase competition and substantially lower prices.

The third order is aimed at preventing “middlemen” or pharmacy benefit managers from pocketing “gigantic discounts,” Trump said. Industry trade group PhRMA, the Pharmaceutical Research and Manufacturers of America, has argued that drug price hikes over the years have been modest and have cited concerns with the nation’s rebate system.

Those are the discounts drugmakers give to middlemen, also known as pharmacy benefit managers, often in exchange for more favorable insurance coverage for their drugs. The group has favored changes to Medicare, including capping the amount seniors would pay for on their own at the pharmacy counter every year. 

The fourth order, which Trump said he may not need to implement, would allow Medicare to purchase drugs at the same price other countries pay. The order would specifically allow Medicare to implement a so-called “international pricing index” to bring drug prices in line with what other nations pay. 

“Everyone will get a fairer and much lower price,” Trump said. “Under our ridiculous system, which has been broken for decades, we’re not even allowed to negotiate the price of drugs.”

He said he will hold the fourth order until Aug. 24 to give the industry time to “come up with something” to reduce drug prices. Drug company executives are scheduled to meet at the White House on Tuesday, he said. 

Prescription drug spending in the U.S. far exceeds that of other high-income countries, increasing to $335 billion in 2018, according to U.S. data. Many Republicans have previously opposed such a proposal, calling it “price controls.”

Trump made lowering drug costs one of his key health-care issues early in his term. But drug pricing has taken a backseat over the last year as the Trump administration has shifted its focus to other priorities such as the teen vaping epidemic and now the coronavirus, which continues to rapidly spread through the United States with more than 4 million cases as of Friday, according to data compiled by Johns Hopkins University. 

Earlier this week, Trump warned that the coronavirus pandemic in the U.S. will probably “get worse before it gets better” and urged the public to wear face masks to help curb the spread of the virus. 

Industry trade group PhRMA, or the Pharmaceutical Research and Manufacturers of America, has argued that drug price hikes over the years have been modest, and have cited concerns with the nation’s rebate system. Those are the discounts drugmakers give to middlemen, also known as pharmacy benefit managers, often in exchange for more favorable insurance coverage for their drugs.  The group has favored changes to Medicare, including capping the amount seniors would pay for on their own at the pharmacy counter every year.

The SPDR S&P Pharmaceuticals ETF (XPH), which tracks drug stocks, was more than 1% lower ahead of Trump’s announcement.

Even though Trump issued the executive orders, it may take months for the administration to finalize them. 

CNBC’s Christina Wilkie and Yelena Dzhanova contributed to this article. 

This is a developing story. Please check back for updates.

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