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EOs Direct Drug Pricing Action, Raise Additional Questions

Summary

The administration’s 4 drug pricing EOs direct agency action across a host of policy areas, including Part D rebates, Part B reimbursement and pricing, 340B drug discounts, and drug importation. Next steps and a timeline for agency action will vary by EO dependent on the specific policies to be advanced or finalized. In the interim, stakeholders should explore outstanding questions and contemplate near- and longer-term policy scenarios.

On July 24, the administration released 3 executive orders (EOs) and announced a fourth EO, all focused on prescription drug pricing. The EOs signal the administration’s reprioritization of drug pricing and reflect familiar policy goals (e.g., rebate reform, drug importation, international reference pricing) along with a new 340B initiative. In combination, these policies could have substantial implications for healthcare stakeholders and pharmaceutical markets if implemented.

However, a host of outstanding questions remain related to the feasibility, timeline, and operational requirements for advancing these policies via regulatory authority. Importantly, the November 2020 election will have substantial influence on the trajectory of these policy initiatives, particularly given it would be unlikely for several of these policies to be fully operational by the end of the year. If former Vice President Joe Biden were to be elected, his administration could make important decisions on the future of the Trump administration’s drug pricing policies and/or choose to advance a new drug pricing agenda. Additional scenarios within Congress, and potential for alignment with the administration, complicate the broader drug pricing policy outlook in 2021 and beyond.

As stakeholders review the EOs and contemplate near- and longer-term implications, Avalere offers a series of observations and questions that must be considered.

Medicare Part D Rebate Reform

The EO directs the Secretary to move forward with the January 2019 proposed rule to eliminate the current federal Anti-Kickback Statute safe harbor protection for drug rebates to Part D plan sponsors and pharmacy benefit managers (PBMs). The rule proposed to implement 2 new safe harbors: 1 would allow discounted prices to be provided to beneficiaries at the point of sale, and the other would permit fixed compensation arrangements between PBMs and manufacturers. Notably, the EO states that the Secretary must confirm that the rule would not increase federal spending, beneficiary premiums, or patients’ total out-of-pocket costs.

IPI Model

When the EOs were announced, President Trump indicated a fourth EO would establish an international pricing index (IPI) model to ensure that the US does not pay more for Part B drugs than similar Organization for Economic Cooperation and Development countries. The administration has not yet released the EO text but has signaled that the EO would go into effect on August 24, 2020, which is intended to provide stakeholders 30 days to consider alternative proposals in place of this EO.

Prescription Drug Importation

The EO directs agency action across 3 policies related to drug importation, including the implementation of the proposed rule released in December 2019, along with 2 new importation policies:

  • Finalize Rulemaking for Importation from Canada. Directs the Secretary to complete rulemaking for the December 2019 proposed rule to allow states, tribal, or territorial agencies to import certain drugs from Canada. Importation programs would be administered at the state level, and states that choose to create an importation program must establish appropriate safety and tracking requirements. To qualify for importation, a drug must be eligible for marketing in the US, as well as for marketing and sale in Canada. This would exclude controlled substances, biological products, infused drugs, and drugs subject to risk evaluation and mitigation strategies, among other products.
  • Allow Personal Importation. Directs the administration to facilitate personal importation by providing waivers to individuals who import prescription drugs, absent a risk to public safety.
  • Allow Re-Importation of Insulin. Allow for the re-importation of insulin products that may be required for emergency medical care.

Offering Insulin and Injectable Epinephrine at 340B Prices in FQHCs

This proposal directs the Secretary of HHS to condition future federally qualified health center (FQHC) grants upon making insulin and injectable epinephrine available at the discounted price FQHCs pay in the 340B Program (plus a minimal administration fee) to low-income individuals with (1) a high cost-sharing requirement for insulin or injectable epinephrine, (2) a high unmet deductible, or (3) no insurance.

To learn more about Avalere’s work related to drug pricing policy and in preparation for post-election policy scenarios, connect with us.

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