Drug Industry Trade Groups Sue Trump Administration Over Drug Pricing Rule
Two drug industry trade groups filed lawsuits to challenge the Trump administration’s finalized rule to lower drug prices. The administration’s policy will enforce the Department of Health and Human Services authority to create and implement a new payment model based on the “most favored nation” price that will lower the price of 50 drugs for the next seven years.
President Trump’s Executive Order Lowering Drug Prices by Putting America First originally was issued in July 2020 but was then amended in September. It ties payments for some drugs made by Medicare to the “most-favored-nation price,” or the lowest price paid by other developed nations with “comparable per-capita gross domestic product.” The administration estimates this will save taxpayers an estimated $85 billion over the next seven years and will go into effect on January 1, 2021, just 19 days before President Trump leaves office.
The executive order states, “Americans pay more per capita for prescription drugs than residents of any other developed country in the world” and the U.S. Federal Government “is the largest payer for prescription drugs in the world.” President Trump cites that “The Council of Economic Advisers has found that Americans finance much of the biopharmaceutical innovation that the world depends on.”
President Trump instructed the Secretary of Health and Human Services to “immediately take appropriate steps to… test a payment model” and to implement this new plan. In a statement by the President made on November 20, the policy will “end global freeloading on the backs of American citizens and American patients.”
The trade organization Biotechnology Innovation Organization (BIO) confirms that “more than half the world’s new medicines are byproducts of U.S labs,” but they further state that “stifling the funding that is needed…. could all but guarantee that future cures die in the lab,” criticizing this change amid a global pandemic. Trade group PhRMA’s president and CEO, Stephen Ubl, also agreed that America is a global leader in research and development within the biopharmaceutical industry, but he also stated, “we need as many shots on goal as possible to beat this pandemic and begin the economic recovery America needs.”
On November 20 President Trump, accompanied by the Secretary of Health and Human Services Alex Azar and the Administrator of the Center for Medicare and Medicaid Services, Seema Verma, announced the finalized ‘most favored nation’ rule following the original executive orders issued in July. President Trump stated, “It took a long time before we were able to do this because, statutorily, we had to go through a process.” However, the two lawsuits filed against this action argue that President Trump did not follow the acceptable process of requesting feedback from stockholders before implementing this new policy.
PhRMA and the biotech industry trade organization both head independent lawsuits to challenge this new policy just weeks before implementation. Pharmaceutical Research and Manufacturers of America (PhRMA) is a pharmaceutical trade industry founded in 1958 that represents biopharmaceutical research companies. PhRMA’s CEO Stephen Ubl commented regarding the policy that it “defies logic that the administration is blindly proceeding with a ‘most favored nation’ policy that gives foreign governments the upper hand in deciding the value of medicine in the United States.”
The other lawsuit against President Trump’s drug price regulation is being filed by the biotech industry trade organization BIO. BIO argued on its website shortly after the release of the September amended executive order that this plan “will cut into future budgets, disrupt the critical work undertaken by American scientist and researchers and stifle investment in cutting-edge scientific innovation for COVID-19 therapies.” Among other setbacks from this new policy, BIO believes these changes will “eliminate hope for vulnerable seniors.” Dr. Michelle McMurry-Heath, BIO’s president and CEO, promised that the company would “remain guided by an overarching focus on putting patients’ interest first” regardless of this policy.
According to SelectUSA.gov, which is managed by the U.S. International Trade Administration, American biopharmaceuticals account for 3% of the global market, and America is the world’s leader in research and development. Additionally, in 2015, this industry accounted for 4% of total output by the USA, which is equivalent to approximately $1.3 trillion. This industry also accounts for 4.7 million jobs in the United States both directly and indirectly.
