Lowering Drug Prices (E.O. 13948)

Summary

Makes sure that Medicare does not pay more for certain drugs than the lowest price paid by other similar developed countries.

What problem does this solve?

Americans pay more for the same prescription drugs than people in other developed countries. This order creates a new payment system for Medicare to ensure it pays the lowest price that other wealthy nations pay for the same drugs.

What does this order do?

Establishes a 'most-favored-nation price' for Medicare drugs

Creates a policy that Medicare should not pay more for certain expensive prescription drugs than the lowest price paid by a comparable developed country.

Creates new payment model for Medicare Part B

Directs the Secretary of Health and Human Services to test a new payment system for high-cost drugs under Medicare Part B to ensure prices are not higher than the 'most-favored-nation price'.

Creates new payment model for Medicare Part D

Directs the Secretary to develop a similar payment model for certain Part D drugs where there is not enough competition, tying the price to what other developed nations pay.

Defines 'most-favored-nation price'

The price is defined as the lowest price a drug maker sells a product for in a member country of the OECD with a similar economy, after adjusting for purchase size and economic differences.

Revokes a previous executive order

Cancels the Executive Order from July 24, 2020, which had the same title.

Who does this affect?

Seniors on Medicare
Pharmaceutical companies
Taxpayers

What is the real world impact?

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Reduces drug costs for seniors and taxpayers

Aims to lower out-of-pocket costs for seniors on Medicare and reduce overall government spending on prescription drugs by preventing the U.S. from paying more than other wealthy countries.

When does this start?

This order takes effect immediately on September 13, 2020, by directing government agencies to begin creating new payment systems.