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Trump’s Executive Orders Will Make Prescription Drugs More Affordable

The existing drug system sounds like something out of The Godfather. Now the president is taking it on.

U.S. President Donald Trump signs executive orders on prescription drug prices in the South Court Auditorium at the White House on July 24, 2020 in Washington, DC. President Trump signed a series of four executive orders aimed at lowering prices that for prescription drugs in the United States. (Photo by Drew Angerer/Getty Images)

President Trump recently introduced four executive orders aimed at reducing drug prices for all Americans. Affordability in health care is consistently a leading issue on the minds of the people, and the price of prescription drugs is a key component of that. Every president, regardless of party, wants to make medication more affordable. But more times than not, they fail to make much of a difference. President Trump’s orders, however, should. 

Insulin, a drug that has been in existence for nearly a century, continues to be cost prohibitive for many diabetics. We’ve all seen story after story of people having to choose between groceries and lifesaving drugs—even at a time when the Affordable Care Act is the law of the land. Over the last 10 years, the price of Humalog, a commonly prescribed insulin, has increased from $75 to $250, with no changes to formula, packaging, or designs.  

Over the same time frame, the list prices established by pharmaceutical companies have skyrocketed, although their profits have remained relatively flat. The middlemen and insurers, however, have seen record growth and rampant consolidation due to the large rebates they command from the manufacturers that benefit from being on the insurers’ drug lists. This is a broken system; it sounds like a business model straight out of The Godfather movies. 

The next EO, the International Pricing Index (also known as the “most favored nation” order), seeks to compel pharmaceutical manufacturers to charge the U.S. no more than the lowest price available among economically advanced countries for Medicare Part B drugs. Clearly, this is rate-setting and not a sustainable solution, but the order is the only one that comes with a trigger mechanism. President Trump has given Big Pharma until noon August 24 to negotiate a substantive plan to lower the cost of drugs for the American people.  

If the manufacturers are unsuccessful in producing a viable plan, it will pull the trigger that initiates most favored nation status. This tactic has given the president necessary leverage to push for a deal that makes sense. 

The importation order achieves the same end, but it will ultimately be up to the states to implement, should they wish to import drugs from nations with which they negotiate. Governor Ron DeSantis of Florida has been a long-time proponent of this policy and has been leading the charge for his state. 

Another order that focuses on bringing down the cost of insulin and epinephrine was issued within the network of clinics known as Federally Qualified Health Centers (FQHC). Patients that are seen in these clinics will now be able to take advantage of newly extended purchasing discounts that will allow them to get these life-saving drugs for pennies on the dollar. 

The fourth and perhaps most substantive order makes rebates for Medicare patients available at the pharmacy. Insurers and other middlemen have often kept these rebates and counted them as revenue rather than passing them on to patients. This order makes Medicare patients the beneficiaries of these rebates, which will result in much greater affordability for our seniors who are often on fixed incomes. 

Are the orders perfect? Perhaps not. But the absence of leadership from Congress to get this done has resulted in needed action from President Trump. The physicians and patients who attended the signing applauded this effort and encouraged the administration to press on to make health care even more affordable. We are all patients, and efforts like this are opportunities for us to unite in our effort to fix our broken health care system. 

David Balat is the policy director of the Right on Healthcare initiative at the Texas Public Policy Foundation.  

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