The pharmaceutical industry and many conservative groups vehemently oppose the most favored nations plan. Stephen Ubl, president and CEO of PhRMA, called the Trump order a “reckless attack”.
The plan would tie payments for certain Medicare drugs to the significantly lower costs the treatments sell for abroad. Trump has touted the effort as a way to fix foreign “free riding” and high costs paid by seniors.
Prices for drugs administered by doctors will be linked to a “most-favored-nation price” drawn from the lowest price among members of the Organization for Economic Cooperation and Development that have a similar per-capita gross domestic product, the executive order states.
The order directs federal health officials to carry out demonstration projects for Medicare Part B, a move that would bypass the months long process of rulemaking and could start the price cuts before Election Day.
It also would develop a similar rule for Medicare Part D, or those drugs that patients pick up at the pharmacy counter. The Part D rule would apply to drugs without much competition for which seniors pay prices higher than those in comparable OECD countries.
Americans spent $535 billion1 on prescription drugs in 2018, an increase of 50 percent since 2010. These price increases far surpass inflation, with Big Pharma increasing prices on its most-prescribed medications by anywhere from 40 percent to 71 percent from 2011 to 2015.2
American taxpayers fund basic research
Billions of taxpayer dollars go into the creation and marketing16 of new drugs. The Los Angeles Times reports that, “Since the 1930s, the National Institutes of Health has invested close to $90017 billion in the basic and applied research that formed both the pharmaceutical and biotechnology sectors.” Despite taxpayers’ crucial investment, U.S. consumers are increasingly paying more for their prescription drugs.