Let’s wrap up my musings on the President’s Executive Order (EO).

Medicaid. Section 6 of the EO directs the Office of Management and Budget (OMB) Director, the Assistant to the President for Domestic Policy, and the Assistant to the President for Economic Policy, in coordination with the Secretary of Health and Human Services (HHS), to provide recommendations to the President within 180 days. (Oh to be a fly on the wall during these meetings.)

The aim is to ensure accurate Medicaid drug rebate payments and to explore innovative ways to pay for drugs in Medicaid, link drug payments to the value obtained, and support states in managing drug spend. Think Cell and Gene Therapy Access Model and tying payment to patient outcomes.

For states, the idea of making sure manufacturers are accurately paying their rebates suggests a drive for greater financial accountability in the program. And it looks like we could see an expansion of value-based purchasing arrangements that are coordinated by the Centers for Medicare & Medicaid Services (CMS).

Pharmaceutical manufacturers will likely face increased scrutiny regarding their Medicaid drug rebate payments, potentially leading to stricter enforcement and a need for more accurate reporting. So, give your government contracts people a little extra love because you will need them.

The exploration of value-based payment models may require manufacturers to adapt their pricing strategies. We could see a shift in Medicaid negotiations away from list price and volume to outcomes — especially for higher cost or higher volume products. Could this be the way in for obesity products?

Today we are hearing stories about tying Medicaid prices to Most Favored Nation (reference pricing with other countries.) I don’t know the differential between Medicaid best price and what other countries pay but I imagine the savings aren’t as spectacular as some might hope.

Insulin and Epi Price Pass-through. Section 7 instructs the Secretary of HHS to take action within 90 days to ensure that future grants available under section 330(e) of the Public Health Service Act are conditional upon health centers establishing practices to make insulin and injectable epinephrine available at or below the discounted price paid under the 340B Prescription Drug Program, plus a minimal administration fee. These health centers receive federal funding to provide care to low-income individuals meeting specific criteria, such as having a high cost-sharing requirement, a high unmet deductible, or no healthcare insurance.

This mandate may introduce administrative complexities in determining patient eligibility and managing the discounted pricing program.While the intent is to directly benefit patients, it could potentially strain the financial stability of these safety-net providers because they are forced to pass along all of the savings.

Pharmaceutical manufacturers will experience an indirect impact through the continued use of the 340B program discounts for insulin.

Pharmacy Benefit Managers (PBMs). Section 8 of the EO directs the Assistant to the President for Domestic Policy, in coordination with the Secretary of HHS, the OMB Director, and the Assistant to the President for Economic Policy, to provide recommendations to the President within 90 days on the supply chain with a focus on PBMs. It calls them middlemen which completely ticks off some people, so you know that the goal is not to be kind. They are looking for transparency and value with the hope that patients may see lower drug prices.

PBMs are likely to see increased scrutiny of their fees and payments and there is potential for regulations that improve the transparency of direct and indirect compensation received by PBMs. We will likely also see a deeper drive into the fees paid by PBMs to brokers for steering employer decisions. 

While the focus will likely stay on PBMs, I am wondering if the overall drive for high cost, high rebate over lower cost, lower rebates will emerge. We have built this system that thrives on the discounts and rebates from manufacturers. It paints manufacturers as greedy, hurts independent pharmacies and drives higher cost-sharing for patients. But it also greases the wheels that make wholesalers, pharmacies, PBMs and plans work (for now.) I want it to change but it feels like pushing a rock uphill. 

I’m not sure if the EO will end up doing much with Congress and states in on the action but we could see some IRS or Department of Labor changes. 

Faster Generics, Biosimilars. Section 9 of the EO requires HHS, through the Food and Drug Administration (FDA), to issue a report providing administrative and legislative recommendations aimed at accelerating the approval of generics, biosimilars, combination products, and second-in-class brand name medications within 180 days. The report will also focus on improving the process for reclassifying prescription drugs as over the counter (OTC) medications, including identifying drugs that can be safely provided to patients without a prescription.

All within an FDA that has just been crushed with layoffs, but sure. I understand the OTC part and I think that makes sense, we’ve talked about this for years and have seen it in action (hi Nexium.) 

Importation. Section 10 of the EO directs the FDA to streamline the process for states to get approval for importation from Canada.

There has been the ability to do importation for over 20 years, but no Secretary of HHS wanted to act on it because of quality and safety concerns. Under the first Trump Administration there was a push to get states to move forward on their own importation plans but, as it turns out, it is hard to implement.  Florida has FDA approval, has identified 14 drugs it intends to import from Canada but has ultimately stalled in their efforts.

So, with importation the issue is we want to guarantee safety of the product, so Canada is often looked at, but they are a country with a population about the size of California. It isn’t reasonable to expect them to start exporting drugs here (and that is without the issues of the last few months.)

And what isn’t mentioned is tariffs. Are these products exempt? Overall, this is a populist idea that has little viability for now.

Site Neutrality. It costs more to use a hospital outpatient department than a provider office so… Section 11 of the EO directs the Sectary of HHS, if appropriate and consistent with applicable law, propose regulations within 180 days. Not required, just sounds he can do something if he feels like.

Patients might see lower out-of-pocket costs if drug administration shifts to less expensive settings like physician offices – that is if they don’t have a plan like Medigap that covers all their Part B expenses. But there are concerns that some patients with complex conditions rely on the resources and infrastructure of a hospital outpatient setting so we don’t want to necessarily make it hard for them to go there. Hospital associations have long opposed site-neutral policies, arguing that hospital outpatient settings often treat a more complex and sicker patient population and incur higher operational costs.

In the real world we have seen the additional revenue of hospital outpatient departments and a love of 340B drive organizations to purchase providers and consolidate the market.

Long time story, not the first attempt at fixing it, may not be able to do much with a powerful lobby behind it.