President Donald Trump’s executive order Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients aims to lower prescription drugs:
The United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits. This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.The United States has for too long turned its back on Americans, who unwittingly sponsor both drug manufacturers and other countries. These entities today rely on price markups on American consumers, generous public subsidies for research and development primarily through the National Institutes of Health, and robust public financing of prescription drug consumption through Federal and State healthcare programs. Drug manufacturers, rather than seeking to equalize evident price discrimination, agree to other countries’ demands for low prices, and simultaneously fight against the ability for public and private payers in the United States to negotiate the best prices for patients. The inflated prices in the United States fuel global innovation while foreign health systems get a free ride.This abuse of Americans’ generosity, who deserve low-cost pharmaceuticals on the same terms as other developed nations, must end. Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories. As the largest purchaser of pharmaceuticals, Americans should get the best deal.
Trump’s main talking points centered around foreign countries..
My Adderall is $200 for 30 days. In Canada? Around $82.50.
My Rinvoq is around $6,000 a month, around $73,000 a year. In Canada? Around $11,915 a year.
“The Secretary of Commerce and the United States Trade Representative shall take all necessary and appropriate action to ensure foreign countries are not engaged in any act, policy, or practice that may be unreasonable or discriminatory or that may impair United States national security and that has the effect of forcing American patients to pay for a disproportionate amount of global pharmaceutical research and development, including by suppressing the price of pharmaceutical products below fair market value in foreign countries,” according to the EO.
Let’s talk about why drugs cost less in foreign countries. There is so much reform America should do that would help bring down pharmaceutical companies that other media outlets won’t elaborate.
It appears the main purpose of the policy is to cut out the middleman, establishing direct-to-consumer (DTC) sales:
Sec. 4. Enabling Direct-to-Consumer Sales to American Patients at the Most-Favored-Nation Price. To the extent consistent with law, the Secretary of Health and Human Services (Secretary) shall facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.
It seems some pharmaceutical companies have already started DTC.
In August 2024, Pfizer and Eli Lilly established websites for customers:
At the end of August, pharmaceutical giant Pfizer announced a new website called PfizerForAll, which provides information on common health issues like migraines or the flu and connects patients to telehealth services and prescription delivery services so they can get treatments and diagnostic tests delivered to their homes. Pfizer promotes some of its own therapies, including Paxlovid for Covid-19 and Nurtec for migraines, on the site.That move came after rival pharmaceutical company Eli Lilly started LillyDirect in January, through which the company delivers prescriptions straight to patients. Eli Lilly also partnered with Amazon Pharmacy in March to deliver some of its medications to consumers’ doorsteps, including Ozempic competitor Zepbound, a GLP-1 weight loss drug.
Major point in that article: “Eliminating some intermediaries could also be a huge cost-savings opportunity for pharma companies, he added. For example, when medications are sold through pharmacies, the pharmacies get a cut of the profit, but if drugmakers are selling directly to consumers, they don’t have to share that revenue.”
Also, DTC helps eliminate a significant problem: Insurance.
Many insurance plans won’t cover popular and more expensive medicines.
Having DTC allows people not to worry about denials.
A Nasdaq article noted that DTC also enhances transparency:
In the DTC model, the cost benefits are clear and substantial. By cutting out intermediaries, healthcare becomes more affordable for patients. But it’s not just about lower costs; it’s about pricing transparency, which has been historically opaque in traditional healthcare pathways. DTC health companies set themselves apart by being upfront about pricing, making them a beacon of clarity in a traditionally complex system.In the realm of DTC, personalization is non-negotiable. Healthcare providers are expected to tailor their services to meet each patient’s unique needs, enhancing the quality of care. This level of personalization builds trust and ensures patient satisfaction, a standard that’s swiftly becoming the norm in healthcare. Through technological innovation, telehealth amplifies the extent of personalized healthcare for patients.
Something stuck out to me when I read the executive order: patent policy.
I remember the complications involved with the drug patent policy in one of my many FDA and drug law courses.
A pharmaceutical company gets a 20-year exclusive patent, which means a delay in competition. The patent starts the day the company files for the patent.
The market exclusivity is around 7-12 years. However, once that exclusivity patent starts, no company can market or sell any similar drug that the patent owner has until that patent runs out.
It allows the company to monopolize the market and set prices as it wishes.
For example, Humira hit the market in 2002. The patent should have ran out in 2016 (again, showing that market exclusivity is shorter than the patent exclusivity) but “the company applied for and obtained over 75 patents that would extend its monopoly to 2034 – and keep this enormously expensive treatment inaccessible to many patients.”
This ties into DTC because many people don’t know about Pharmacy Benefit Managers (PBMs). I’m glad Psychology Today broke this down because I would make it an article!
I lashed out against this position in one of my classes because I’m like, “Is this why my Rinvoq costs $6,000 a month?”
Anyway, the PBM is one of those middlemen (emphasis mine):
PBMs date from the late 1950s, when they were created to manage medication reimbursements that were becoming part of medical insurance policies. Over time, PBMs repositioned themselves as critical middlemen between drug manufacturers and pharmacies and, thus patients. Currently, PBMs create the formularies that insurance companies use to determine which medications are covered by a given insurance plan. PBMs also provide “utilization management”, i.e., enforcing the stepwise gauntlet that patients must run and fail before they qualify for the next higher level of medication. Finally, PBMs negotiate prices with drug manufacturers on “behalf” of insurance companies and institutions.In addition to these multiple “middleman” roles, PBMs are “vertically integrated” in most healthcare systems. That is, PBMs own or are owned by the very same major pharmacy chains that they are negotiating with. This leads to “market concentration” such that the top 3 PBMs account for 75% of all U.S. prescriptions. The top 6 PBMs account for 96% of all U.S. drug prescriptions filled.
The part I highlighted? That’s what we call a conflict of interest, my friend.
It also means the PBM interferes with competition, steering patients to specific pharmacies. A monopoly blossoms, allowing the pharmacy to maximize its profits and sell drugs at a higher cost.
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