Does it seem to you that prescription drug prices are increasing every year? If so, you’re right!
Prescription drug prices increase faster than inflation and are climbing each year.
It’s hitting our wallet and we notice it; 92% of consumers surveyed believe that prescription prices are too high. With climbing rates, relief is welcome and a new plan may just be a step in the right direction.
In an innovative move, President Trump recently signed four Executive Orders requiring the Department of Health and Human Services (“HHS”) to take several actions designed to reduce prescription drug pricing. These Executive Orders will take effect 30 days after President Trump’s signature. Each Executive Order lays out a different aspect of prescription pricing and aims to reduce drug prices in the US. President Trump explicitly stated that these Executive Orders will be implemented as written, unless the pharmaceutical industry comes to him and negotiates another way to provide lower drug pricing.
There are four Executive Orders that make up the relief package.
Reduce the High Cost of Insulin and Epinephrine
The first Executive Order addresses the high costs of insulin and epinephrine for those who have high cost sharing requirements, high unmet deductibles, or who are uninsured. Both insulin and epinephrine are available at a fraction of the cost at Federally Qualified Health Centers (“FQHC”). When insulin or epinephrine is purchased, the Order will require the cost savings achieved by the FQHC to be passed on to the consumer. Today, those costs are not typically passed to consumers so this will be an impactful change.
International Drug Pricing Index
The second Executive Order creates an international index of drug prices. The purpose of the index is to set the rate at which Medicare Part B would pay for its costliest drugs. Once the index is created, the rate Medicare Part B pays would be comparable to the lowest rate paid by other economically advanced countries. The idea here is to make sure we’re paying an equivalent price to economically similar countries. This Executive Order was not provided to the public so that industry and the White House have the opportunity to come to a separate agreement on pricing by August 24th. If they come to an agreement by then, the Executive Order will not be provided to the public.
Safe Importation of Prescription Drugs
Consumers have long wondered whether to buy cheaper drugs from Canada or Mexico? Are those drugs the same and are they safe to take? The Executive Order notes that Americans spend more per capita on pharmaceutical drugs than any other country in the world. Allowing Americans to import drugs from countries that charge less for the same drug will have an immediate impact of reducing prices while over time, it is expected that US drug companies will lower drug prices so that they may compete with imported drugs.
Eliminate Medicare Part D Drug Rebates
The final Executive Order focuses on the rebates, which it characterizes as ‘kick backs’ to the pharmacy benefit managers (“PBM”) who are middlemen between the pharmaceutical company and the consumer, in the chain of delivery. The core concept is to deliver these discounts to the consumers at the pharmacy, rather than throughout the chain of distribution. What remains important here is that the monthly premiums paid for Medicare Part D remain the same, so the Executive Order requires HHS to conduct an analysis of how adjusting rebates in this way would impact premiums before implementing the program. The Executive Order requires HHS to confirm that there is no increase to Medicare Part D’s out of pocket costs or monthly premiums.
President Trump’s Executive Orders are designed to reduce out of pocket costs for consumers at the pharmacy. With rising prescription drug prices, this relief is welcome.
Jan Dubauskas is a healthcare expert, enthusiastic insurance pro, attorney and mom serving as vice president of healthinsurance.com.
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