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- At the Republican National Convention, President Donald Trump claimed he signed two executive orders designed to bring down drug prices.
- It is true that Trump issued a series of orders in July with this purpose.
- But the text of one of the orders, which Trump referred to as the “favored nations clause,” has yet to be made public, so details about its implementation and possible savings are unclear.
- Experts say the other order, which focuses on rebates to pharmacy benefit managers within the Medicare program, is “internally contradictory,” so it would be difficult to implement.
President Donald Trump has long considered lowering the high cost of prescription drugs to be one of his signature issues, and it is likely to be a talking point he relies on throughout the upcoming campaign.
During his afternoon speech Monday ― delivered on the first day of the Repubublican National Convention after delegates had unanimously renominated him to seek reelection ― he returned to this theme.
"Now, I'm really doing it," he said, referring to a series of four executive orders he issued in July. These orders touched on a range of issues, including insulin prices and drug importation. He focused on two specifically.
"But the fact is that we signed a favored nations clause and a rebate clause, and your numbers are going to come down 60, 70%," he said.
However, those executive orders are far from being implemented, and multiple experts told us it’s unlikely the measures would pass along drug-pricing discounts to a majority of Americans. And the text of one, the favored nation executive order, has not yet been made public ― making it hard to know how exactly the initiative would work.
"Details are a bit murky," Matthew Fiedler, a health care fellow with the Brookings Institution, wrote in an email.
We checked in with the White House to find out more details about the favored nation order and when the text might be released. However, we did not get a response. Still, we decided to dig in.
The favored nation executive order was supposed to match U.S. prices for a certain class of drugs with the lower amount paid in certain European countries, which negotiate drug prices. It reportedly would have applied only to drugs covered by Medicare Part B ― those that patients receive at their doctors’ offices, such as infused cancer drugs ― but not those purchased at the pharmacy counter. Drug companies criticized the executive order, and the Trump administration offered to consider an alternative plan if the firms offered it by Aug. 24. So far, the industry has not made a counter offer.
A spokesperson for PhRMA, the lobbying group that represents major drugmakers, said in a statement that "the most favored nation executive order is an irresponsible and unworkable policy that will give foreign politicians a say in how America provides access to treatments and cures for seniors and people struggling with devastating diseases." The group did not confirm on the record whether an alternative drug-pricing plan had been discussed with the White House.
The Trump administration floated a similar idea in 2018, which met with swift criticism from some of its usual supporters, such as Americans for Tax Reform, a right-leaning advocacy group that opposes tax increases. The criticism was marked by TV ads warning that this approach to drug costs was a step toward socialism. We found that claim to be Mostly False. The Centers for Medicare & Medicaid Services estimated at that time the resulting savings from such a plan would be 30%, but it was never enacted.
Multiple experts questioned Trump’s claims about how much costs would come down as a result of the more recent proposal.
That’s in part because the full text of the executive order has not been published, and so classifying the president’s statement as true "requires a leap of faith," said Benedic Ippolito, a resident scholar who studies health care costs at the American Enterprise Institute.
Ippolito allowed that because some drug prices in other countries are far below those in the U.S., a reduction of 60% or 70% could be plausible for an individual product. But, in order for that to happen, the policy would have to be implemented.
Seeing this 60% to 70% decrease "relies on the idea that this policy ever happens. And I think there is reason to be very skeptical there," Ippolito wrote in an email.
Rachel Sachs, an associate professor of law at Washington University in St. Louis, who has analyzed the drug-pricing executive orders, agreed there’s no solid foundation to support those percentages.
"I don’t know about the 60 or 70%," she said. "I don’t know what he’s talking about."
Another executive order attempted to address the rebates paid to pharmacy benefit managers within Medicare by directing that these payments instead be used as discounts for beneficiaries within the Part D program, the plans that pay for prescription medications.
However, experts pointed out that those discounts usually go toward lowering insurance premiums for seniors. Without applying the discount there, premiums would likely go up. And, in order to keep premiums down, the federal government would need to spend more on subsidies.
Analyses from the Congressional Budget Office and other groups predicted that Trump’s rebate proposal would lower drug prices for some seniors, but would also increase federal spending and increase seniors’ premiums.
There is also a stipulation in the text of the order, which says the order cannot be implemented if it leads to increased government spending or higher premiums for beneficiaries. Thus, it’s unclear how such a proposal would be implemented.
"The executive order on the rebate is internally contradictory, which makes you wonder how they can do this," said Sachs.
Trump is likely to continue saying he has reduced drug prices, not only during the Republican National Convention but for the remainder of the 2020 campaign.
Trump likes to present proposals in the works as having been implemented, and we’ve fact-checked him twice before on similar drug-pricing statements.
In May 2019, he claimed he brought down drug prices for the first time in 51 years, which we found to be Mostly False. And in early August of that year, we fact-checked a claim about another of his drug-pricing executive orders that inflated his efforts to reduce insulin prices, which we also found to be Mostly False.
This time, Trump referenced two different drug-pricing executive orders. While it is true that he signed both of them (though the text of only one is publicly available), experts have expressed skepticism about whether these proposals will be implemented, as well as whether they would lower drug prices significantly for Americans.
And this isn’t the first time Trump has made this promise to the American people.
"He promised to lower drug prices as part of his campaign in 2016 and has done absolutely nothing of substance about drug prices at all while he’s been in office," Aaron Kesselheim, a professor of medicine at Harvard, wrote in an email.
Centers for Medicare & Medicaid Services, International Pricing Index Model, accessed Aug. 24, 2020.
Congressional Budget Office, "Incorporating the Effects of the Proposed Rule on Safe Harbors for Pharmaceutical Rebates in CBO’s Budget Projections ― Supplemental Material for Updated Budget Projections: 2019 to 2029," May 2019.
Email interview with Stacie Dusetzina, associate professor of health policy at Vanderbilt University, Aug. 24, 2020.
Email interview with Matthew Fiedler, health care fellow with the Brookings Institution, Aug. 24, 2020.
Email interview with Benedic Ippolito, resident scholar in economic policy at the American Enterprise Institute, Aug. 25, 2020.
Email interview with Aaron S. Kesselheim, professor of medicine at Harvard University, Aug. 24, 2020.
Kaiser Health News & PolitiFact, "Fact-Checking Donald Trump’s Claim That Drug Prices Are Going Down," May 22, 2019.
Kaiser Health News & PolitiFact, "A Conservative Group Paints Trump’s Drug Pricing Experiment ‘Socialist.’ Is It?" Aug. 25, 2020.
PolitiFact, "Trump Inflates Insulin Help for Seniors," Aug. 3, 2020.
Phone interview with Rachel Sachs, associate professor of law at Washington University in St. Louis, Aug. 24, 2020.
NPR, "Trump Signs Executive Order on Drug Prices," July 24, 2020.
The White House, "Executive Order on Lowering Prices for Patients by Eliminating Kickbacks to Middlemen," July 24, 2020.