Administration Ramps Up Drug Pricing Focus on Medicare B, D

The administration continued its push to reduce drug spending with a Sept. 13 executive order focused on Medicare Part B and Part D. While previous efforts had focused on Part B, including an International Pricing Index (IPI) model, Part D had not previously been targeted. Many industry insiders view the moves as simply an effort by President Donald Trump to sway voters in his favor in the Nov. 3 election. And multiple questions exist over the executive order, which is scant on details.

Medicare should not pay more for products in Parts B and D than the most- favored-nation price, says the order. That price is defined as the lowest one for a product that its manufacturer sells “in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.” The proposal calls for the HHS secretary — currently Alex Azar — “to implement his rulemaking plan” in Part B and “develop and implement a rulemaking plan” in Part D to test payment models in which Medicare would not pay more than the most-favored-nation price to determine whether they “would mitigate poor clinical outcomes and increased expenditures associated with high drug costs.” The order also revoked a July 24 executive order that applied the most-favored-nation proposal to Part B only.

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