Introduction to the Executive Order
President Donald Trump says he’ll sign an executive order on Monday that, if implemented, could bring down the costs of some medications — reviving a failed effort from his first term on an issue he’s talked up since even before becoming president.
Details of the Executive Order
The order Trump is promising will direct the Department of Health and Human Services to tie what Medicare pays for medications administrated in a doctor’s office to the lowest price paid by other countries.
“I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World,” the president posted Sunday on his social media site, pledging to sign the order on Monday morning at the White House.
Expected Impact
“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 and Drug Prices
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.
Opposition from the Pharmaceutical Industry
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.
Scope of the Plan
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. President Donald Trump held a rally in Michigan Tuesday night to mark the first 100 days of his second term.
Background and Previous Efforts
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.
Conclusion
In conclusion, the executive order aimed at reducing medication costs by tying Medicare payments to the lowest price paid by other countries is a significant move. While it faces opposition and its impact may be limited to certain drugs, it reflects a long-standing concern over high drug prices in the U.S. and efforts to find a solution that benefits American citizens.
FAQs
- Q: What does the executive order aim to do?
- A: The order aims to reduce medication costs by directing the Department of Health and Human Services to tie what Medicare pays for medications administered in a doctor’s office to the lowest price paid by other countries.
- Q: Which drugs are likely to be covered under the plan?
- A: Only drugs on Medicare Part B, which covers doctor’s office visits, are likely to be covered.
- Q: How much could the government save with this plan?
- A: While the exact savings are not specified, the plan could potentially bring significant savings to the government.
- Q: Why does the pharmaceutical industry oppose this plan?
- A: The industry argues that forcing lower prices will hurt profits and ultimately affect innovation and efforts to develop new medicines.
- Q: Is this the first time such a proposal has been made?
- A: No, Trump tried to adopt a similar rule during his first term but was unsuccessful.
