US President Signs Another Executive Order Implementing International Pricing Index Model

• 15/09/2020
• Articles

On 13 September 2020, the US President signed another executive order (the New Order) implementing an international pricing index model (see, attachment). At the same time, he revoked an earlier such order signed at the end of July 2020 (see, Van Bael & Bellis Life Sciences News Alert of 28 July 2020).
 
The New Order is more a political manifesto than a set of technical rules. It once more bemoans the allegedly unfair price differences for many prescription medicines between the US and other developed nations and posits that US citizens are thus “subsidizing innovation and lower-cost drugs for the rest of the world”. Additionally, the New Order expresses concern about access to medicines in that “high drug prices in the United States also have serious economic and health consequences for patients in need of treatment”.
 
The New Order seeks to remedy these problems in similar fashion to what the July order tried to achieve and dictates that the price of qualifying medicines should not exceed that of the most-favoured nation price (MFNP) for these medicines. The MFNP is defined as the “lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organisation for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.”
 
On that basis, the Secretary of Health and Human Services is directed to develop and test a payment model which implements the MFNP for two categories of medicines. Critics were quick to point out that the elaboration of a payment model does nothing more than signaling the start of a potentially lengthy administrative process. Still, developed nations are again at the receiving end of a strong message that prices for medicines in overseas markets that were developed in the US are likely to go up rather than down, regardless of their actual development costs.