Trump Issues Executive Order Intended to Lower Medicare Drug Costs

• by Christian Worstell
• August 21, 2020

Published August 5, 2020

Follow our Medicare Coronavirus News page for related information on coronavirus (COVID-19) and its impact on Medicare beneficiaries.

President Trump issued an executive order on July 24 intended to lower prescription drug prices for Medicare by linking drug costs to the prices paid for the same drug in other countries. The order also allows Medicare beneficiaries to purchase medication imported from Canada. 

The order that ties prescription drugs to international benchmarks, known as the “most-favored-nations rule,” will not go into effect until Aug. 24. Pharmaceutical companies have until then to come up with alternative measures for lowering the costs of their drugs. 

Health officials estimate the move can save Medicare $17 billion in the first five years. Medicare spent $335 billion on prescription drugs in 2018.

Further measures to lower insulin costs and reform drug reimbursement

There were additional action items included in Trump’s recent orders.

One measure involves stripping away legal protections for reimbursements that drug manufacturers make to middlemen and insurance plans that provide drug coverage through Medicare or Medicaid. 

Because these reimbursements are typically based on the price of the drug, drugmakers are incentivized to charge higher drug prices. Trump’s orders would implement a flat-fee reimbursement.

Another aspect of the executive orders requires health centers that use the federal drug discount program to pass on any resulting savings on insulin or insulin pens to patients.

Drugmakers and democrats push back on Trump’s orders

The executive order was not well received by everyone. Drugmakers and democrats had concerns about the effects the executive orders could have.

• Medicare drug coverage premiums could rise as pharmaceutical companies attempt to recoup the loss of revenue due to reduced prices.
  
  
• Drug manufacturers currently working on a COVID-19 vaccine may have to divert current efforts to develop a vaccine and effective treatments for the disease caused by the novel coronavirus.

Several top pharmaceutical companies requested a White House meeting concerning the issue. The meeting was scheduled for July 28 but was later cancelled after major drug lobbies refused to send representatives.

Learn more about Medicare news and how the 2020 election may affect beneficiaries.

About the author

Christian Worstell is a senior Medicare and health insurance writer with MedicareAdvantage.com. He is also a licensed health insurance agent. Christian is well-known in the insurance industry for the thousands of educational articles he’s written, helping Americans better understand their health insurance and Medicare coverage.

Christian’s work as a Medicare expert has appeared in several top-tier and trade news outlets including Forbes, MarketWatch, WebMD and Yahoo! Finance.

Christian has written hundreds of articles for MedicareAvantage.com that teach Medicare beneficiaries the best practices for navigating Medicare. His articles are read by thousands of older Americans each month. By better understanding their health care coverage, readers may hopefully learn how to limit their out-of-pocket Medicare spending and access quality medical care.

Christian’s passion for his role stems from his desire to make a difference in the senior community. He strongly believes that the more beneficiaries know about their Medicare coverage, the better their overall health and wellness is as a result.

A current resident of Raleigh, Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism.

If you’re a member of the media looking to connect with Christian, please don’t hesitate to email our public relations team at Mike@tzhealthmedia.com.

 

 

​

Read less