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Trump White House Prepares Executive Order on Drug Pricing

Directive will include use of value-based contracts for drug purchases

The Trump administration is drafting an executive order to rein in prescription drug prices, according to an article posted on the BioCentury website. The order will instruct executive agencies to use value-based contracts for drug purchases, and to pursue trade policies that enhance the intellectual property rights of American pharmaceutical companies.

Since his election, President Donald Trump has often criticized the pharma industry, saying in January, for example, that it has been “getting away with murder” with high drug prices. At that time, he said the government would implement competitive bidding to save billions of dollars in costs.

The BioCentury report came a day after the Senate’s Health, Education, Labor, and Pensions Committee held a hearing on drug pricing. At that meeting, Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, presented a long menu of drug price-control proposals. They included negotiating the prices that Medicare Part D pays for specialty drugs, and if such negotiations are unsuccessful, using “reference pricing, binding arbitration, or value-based pricing” to set prices.

Allan Coukell, senior director of health programs at the Pew Charitable Trusts, advocated FDA policies that enhance generic and biosimilar competition. He called for increased competition in Medicare parts B and D; suggested that Congress consider limiting the orphan drug exclusion from the 340B drug discount program; and highlighted value-based pricing.

The testimony about how drug prices are set and proposals for reducing drug costs was overshadowed, however, by complaints from Democrats that Republicans were acting in secret to create legislation that would repeal the Patient Protection and Affordable Care Act (PPACA)––apparently forgetting how their party crafted the PPACA in the first place. Few Republicans attended the hearing because they were at a closed-door meeting about PPACA repeal legislation.

Senator Lamar Alexander (R-Kentucky), the committee's chairman, said the group will hold a second hearing in July “to hear about the process––beginning with a manufacturer’s development of a drug; the different steps through which the drug travels before arriving in the patient’s hands; how this is paid for; and what the costs are at each of the different steps.”

At a third hearing in the fall, results will be presented from a National Academy of Sciences study on ensuring patient access to affordable drug therapies.

In related news, Senator Ron Wyden (D-Oregon) has introduced the SPIKE Act aimed at deterring the large drug price-hikes that have made headlines over the last two years. Wyden’s bill would force drug-makers to justify price jumps above a certain threshold. It could also require some companies to disclose R&D and marketing costs.

The proposed legislation targets not only sky-high price increases, such as Turing Pharma’s notorious 5,000% increase on Daraprim (pyrimethamine), but also smaller hikes on big-selling drugs that can hit Medicare and Medicaid budgets hard. The bill would require drug-makers to roll back their price hikes if they refuse to release information justifying the underlying costs.

Sources: BioCentury; June 13, 2017; and FiercePharma; June 14, 2017.

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