President Donald Trump announced two sweeping regulations Friday aimed at lowering prescription drug prices for Americans.
One of the rules implements what is known as a “most favored nation” approach that limits what Medicare pays for medications to the lowest price paid by other economically advanced countries. The administration says it could save $28 billion for Medicare beneficiaries through lower copays.
The other rule would require drug makers to push rebates and discounts directly on to Medicare patients rather than to insurers and middlemen pharmacy benefit managers. The Trump administration says the rule could potentially result in 30 percent savings for patients, although the Congressional Budget Office estimates it could ultimately cost taxpayers more.
Both rules are set to take effect on January 1, although the pharmaceutical industry is expected to mount legal challenges that could delay or block the rules. The rules could also be overturned if Joe Biden takes office in January.
“The drug companies don’t like me too much. But we had to do it,” Trump said in announcing the new policies at the White House. “I just hope they keep it. I hope they have the courage to keep it.”
The drug industry’s influential lobbyists are also expected to pressure Congress to reverse the rules through legislation.
The industry is considering “all options to stop this reckless attack on the companies working around the clock to beat COVID-19,” the Pharmaceutical Research and Manufacturers of America said in a statement.
Trump came into office accusing pharmaceutical companies of “getting away with murder” and complaining that other countries whose governments set drug prices were taking advantage of Americans.
As a candidate in 2016, Trump advocated for Medicare to negotiate prices. As president, he dropped that idea, objected to by most Republicans. Instead, Trump began pursuing changes through regulations.
He also backed a bipartisan Senate bill that would have capped what Medicare recipients with high bills pay for medications, while generally limiting price increases. Ambitious in scope, the legislation from Sens. Chuck Grassley (R-IA) and Ron Wyden (D-OR) did not get a full Senate vote.
Many other countries have their medical systems negotiate with drug makers for lower prices, effectively making the U.S. bear more of the costs of drug manufacturing and development and subsidize the prescription drugs consumed by the rest of the world. This has long bothered Trump, and economic nationalists have urged him to push back on this by adopting something like the most favored nation rule announced Friday.
The Associated Press contributed to this report.