CLOSE MENUThe Executive Order on Lowering Drug Prices by Putting America First proposes to lower drug costs by setting Medicare Part B and Part D prescription drugs and biological products to the price of the most favored nation. The executive order defines the most favored nation price as “the lowest price, after adjusting for volume and differences in national gross domestic product” of the product that is sold to an OECD country that has a comparable per-capita GDP.
In Medicare Part B, this policy gives the HHS Secretary the ability to implement the rulemaking plan to test the payment model which Medicare would pay no more than the most favored nation price. Medicare Part D would be eligible for the same rulemaking plan. The models would test the clinical outcomes and increased spending associated with high drug costs for the patients paying the most favored nation price.
This order also revokes the July 24, 2020 version of the executive order.
The expert panel agreed that this policy will reduce drug spending, but were split on if it would be a minimal or moderate reduction. The majority of the experts believed that the executive order will moderately decrease both list and net prices. While most patient groups will not see a change in drug access, most of the panel felt Medicare patients and large patient groups may see a moderate increase in their access.
The experts were divided on how significant this policy is in the evolution of drug spending policy; six experts felt that the most favored nation order significantly advances drug spending policy, but three felt it only moderately advances drug spending policy. Most of the experts felt the executive order’s ability to be implemented is a weakness of the policy, but that its precedent-setting value is a strength. Over half of the panel stated that the size of the affected population is a strength, but the other four experts were split on if that is a weakness or if it remains unknown.
Experts highlighted many considerations for policymakers. The most important of which are that it remains unclear how other countries or domestic manufacturers will respond to this policy change. Other key considerations include the congressional action that would be necessary to implement the Part D provisions and that it remains unclear how rebates in other countries would be factored into price setting. Additional considerations include the uncertainty surrounding which drugs will be impacted, how prices will be set within Part D given the interaction with private plans, and if the "most favored nation" will change over time or between drugs.
