After a harsh initial reaction to President Donald Trump's order tying U.S. drug prices to the much lower stickers abroad, pharma companies have come to the negotiating table.
In a counteroffer sent to the White House, the industry proposes about a 10% discount to drugs administered at hospitals and clinics and covered under Medicare Part B, Politico reports, citing an industry memo. That compares with expected discounts of 30% under the international price index, also called the "favored nations clause."
Still, a month after Trump touted the order at a signing ceremony, the White House has not released its text or details, the New York Times reports. And Trump is campaigning for reelection as if the order is a done deal.
After the signing ceremony last month, the pharma industry instantly pushed back. On earnings conference calls, CEOs said the proposal ignores differences among healthcare systems, such as innovation and access. Sanofi CEO Paul Hudson said it's a "convenient" subject right before the U.S. election. At the time, Trump said he was set to meet with drug CEOs to discuss the issue, but the meeting never happened.
As part of the industry's counteroffer, drugmakers also offered a cost-sharing cap for patients in Medicare Part D’s catastrophic coverage phase. Drug companies further pledged to work on long-term reforms to Medicare Part D and Part B, according to Politico. Together, the proposals would bring savings of around $100 billion over 10 years.
When Trump appeared at the signing ceremony last month, he gave pharma companies until August 24 to submit their own price-lowering proposals. PhRMA’s board approved the counteroffer Sunday, a source told Politico.
The counteroffer is at least somewhat surprising, considering the industry's initial response to the president’s executive orders. After Trump unveiled his orders, pharma CEOs criticized the plans and questioned whether they could legally be implemented. On Pfizer’s quarterly conference call, CEO Albert Bourla said he doesn’t “think there is a need, right now, for White House meetings.”
Aside from tying U.S. prices to lower drug prices abroad, the president's orders centered on creating discounts for insulin and epinephrine, eliminating rebates from pharmacy benefits managers, and allowing drug imports from Canada and other countries. Implementation poses an issue, and experts said the orders wouldn't have a major effect before the election because of the rulemaking process.
Addressing that topic, PhRMA proposes an “aggressive” implementation schedule before the election because it’s offering a “voluntary model” that wouldn’t require rulemaking, according to Politico.
Since Trump signed his drug pricing executive orders, he also signed a “Buy American” order that further angered the drug industry.
It calls on the federal government to make a list of “essential” medicines and direct agencies to purchase those drugs from American factories. The plan “creates even more barriers to ongoing biopharmaceutical manufacturing and innovation” and distracts from the fight against COVID-19, PhRMA CEO Stephen Ubl responded.