Earlier this week, President Donald Trump signed an executive order that promises to drastically lower prescription drug prices in the U.S.
The president said he would be able to cut drug costs by as much as 90 percent, however experts remain skeptical about whether this will be possible, given the potential court or political challenges the order could face as well as the fact it is not yet entirely clear how the Trump administration will manage such a feat.
The order aims to target a key problem facing Americans—that they pay significantly more for prescription medications than consumers elsewhere, with branded drugs in the U.S. costing around three times more than those in other countries.
Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health, told Newsweek, that in some cases, the difference in price can be as much as 100 times greater in the U.S.
Reliance on Drug Manufacturers to Lower Prices
While the order aims to tackle the major issue of high prescription drug costs for Americans, experts warn that the fact it relies on manufacturers to voluntarily lower their prices means little change could be felt for consumers.
Trump‘s executive order set a 30-day deadline for drugmakers to lower the cost of prescription drugs in the U.S, directing Secretary of Health and Human Services Robert F. Kennedy Jr, to kick off negotiations to that effect.
Should deals, or “significant progress” toward deals, not be made, Kennedy is to enforce what is known as the “most-favored-nation” pricing, which would in theory tie the price the U.S. pays for medications to lower prices paid by other countries.
Anderson said: “The executive order is much ado about nothing. Drug companies are not going to voluntarily lower their prices, and other countries are not going to voluntary increase their prices.”
The incentive for manufacturers to lower the price is also based on the possibility that they could sell directly to consumers, however, Dr. Mariana Socal, a professor at the Johns Hopkins Bloomberg School of Public Health, told Newsweek that “most drug manufacturers do not have a structure to provide direct-to-consumer sales today.”
How Health Insurance Companies Could Respond
As the new order targets high-cost drugs, health insurers, which help cover the cost of some prescription drugs, are also a big part of the picture.
So, the question is how health insurers would respond, Socal said. “Insurers charge lower copays when patients buy their drugs from in-network pharmacies and providers,” she added.
It is therefore hard to know whether health insurance would cover drugs purchased directly from drug manufacturers, and if so, how much they will charge patients for in-network or out-of-network rates, Socal said.
“In the U.S., the patient experience is determined by their insurer, so even if prices were lower, patients may not get access to those prices,” she added.
This is because some patients may be paying a fixed copay, such as $5 or $50, for a drug and would not pay less if the drug is cheaper, while patients who pay based on the drug price may not be covered if they buy directly from the manufacturer, Socal said.
These factors therefore make it hard to determine whether manufacturers will lower drug prices at their end, and if they were to lower the price, whether patients would pay fewer out-of-pocket costs for the drugs.
Political and Legal Challenges
Another key determinant as to whether consumers will feel a drop in out-of-pocket costs of drugs, following the signing of the order, is whether or not it will face various challenges, which could stunt the proposed changes.
“Any effort to peg U.S. drug prices to those in other wealthy countries would probably require Congress to change the law, and it’s unclear whether Congress would support such a move,” Olivier Wouters, a professor in the department of health services, at the Policy and Practice at Brown University’s School of Public Health, told Newsweek.
Anderson also thought the order could face political challenges. “Congress is not going to be receptive to this idea,” he said, adding that the Democrats proposed a version of the “most favored nation” idea, in the Build Back Better legislation that passed in the U.S. House of Representatives in 2021.
He added: “But all the Republicans opposed it. It seems very unlikely that the Republicans would make a 180 degree change and now support the idea.”
Wouters added that the executive order is also “thin on details” about how the administration would actually achieve such large price cuts, making it hard to know how the it intends to implement the proposal.
“Beyond the political hurdles, such a measure would likely face a flurry of legal challenges,” she added.
She said: “Many see the proposal as dead on arrival, which is likely why shares of both small biotechs and large pharmaceutical companies rose following the announcement.”
Wouters said that the Trump administration “is sidestepping the hard job of figuring out which drug prices offer good value.”
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