The Trump administration acted to tie Medicare payments for outpatient and pharmacy drugs to the lowest price offered in comparable developed countries, which could significantly increase the prices employer plans pay.
The order directs HHS to implement a Medicare demonstration project to test a payment model where the program would pay no more than the most-favored-nation price for certain high-cost prescription drugs and biological products covered by Medicare Part B. It also directs HHS to publish a rule for Medicare Part D so seniors pay no more than the most-favored-nation price at the pharmacy counter.
Impact on employer costs? The order does not directly impact commercial drug prices, which could increase as the pharmacy supply chain seeks to offset the lower prices paid by Medicare.
The Pharmaceutical Research and Manufacturers of America called the order an “irresponsible and unworkable” plan that “threatens America's innovation leadership and puts access to medicines for tens of millions of seniors at risk.” The U.S. Chamber of Commerce said “importing price controls from foreign countries is flawed and dangerous policy that will result in a substantial reduction in investment in new cures and drugs at the worst possible time.”
Outlook: Ordering HHS to implement a demonstration project bypasses the lengthy rulemaking process and could result in lower Medicare Part B drug prices before the November election. However, it will take months to publish a rule for Medicare Part D, and any final rule will almost certainly be challenged in court. Should Democrats sweep the November election, legislation to reduce drug prices in some fashion is a near certainty.