A Message from Mona Chitre
As your partner in managing pharmacy benefits, we routinely share the latest news impacting health care in our communities. By now, you have likely heard about the recent presidential executive order on drug pricing.
We are closely monitoring the news surrounding this order and its potential impact. Here is a quick summary of what we’ve seen in the news so far:
Background And Details Of The Executive Order:
The United States funds and subsidizes pharmaceutical research and development for the world. Yet, according to the executive order, US prices for brand name drugs are significantly higher than most countries.
According to the order, the prices Americans pay for prescription drugs must align with the lowest prices paid in other developed nations. The order suggests that this is needed to address what it terms “global free-riding” on US-funded pharmaceutical innovation.
Additionally, the order states that the Secretary of Health and Human Services will establish a mechanism through which American patients can buy their drugs directly from manufacturers who sell to Americans at a “Most-Favored-Nation” price, bypassing middlemen.
As currently presented, the executive order is a voluntary program designed to achieve historically significant price reductions. It also implies that those who do not participate will be penalized but does not offer a framework for what that means.
Potential Impacts:
While the order was just announced and the implementation plan for it is unknown at this time, according to various media reports, and an industry brief from Price Waterhouse Cooper, the following are potential impacts:
- At risk is a complete overhaul of pricing models for the pharmaceutical industry, with implications across all Lines of Business (Medicaid Best Price, IRA discounts), as well as reduced revenue.
- With pharmacies and wholesale distributors, there could be changes to reimbursement. They may also lose business if patients go directly to the pharmaceutical manufacturer for their medication.
- With PBMs and payers, the rebate model and contracted pricing are at risk as is the current business model of the Big 3 (Cigna, CVS, United Healthcare).
- For providers, this could have impact on the 340B Drug Pricing Program. Ceiling prices could erode if MFN pricing establishes a lower best price. Ceiling prices are the maximum statutory price a manufacturer can charge a covered entity for the purchase of a covered outpatient drug.
As our partners in health care, we want to be sure you are equally aware of the issues and trends impacting our industry. We will continue to share more as the details surrounding the executive order evolve.
In the meantime, please reach out to your account manager should you have questions or wish to discuss.
Thank you for your continued partnership,
Mona Chitre, Chief Pharmacy Officer & President of Pharmacy Solutions
