“This provides an opening,” said Elizabeth Fowler, executive vice president for programs at the nonpartisan Commonwealth Fund. “Maybe it’s a bargaining chip with the industry.”
Biden likes the idea of bringing high U.S. drug prices more in line with other countries’ lower prices.
This is the core idea in the “most favored nation” rule Trump announced on Friday. It will tie the prices of drugs in Medicare Part B to the lower prices in other developed countries, many of which negotiate those prices directly with drugmakers.
This approach — of linking high-cost U.S. drugs to an international index — is one that has been embraced by many Democrats. Last year, House Democrats passed a bill allowing the federal government to negotiate lower Medicare drug prices. The bill, H.R. 3, uses an index of prices in six other countries as a price ceiling for the United States.
Implemented a most favored nation rule represents a major shift in the way the federal government sets prices for drugs in the Medicare program and could result in significant payment cuts for drugmakers.
During his campaign, Biden proposed creating an independent panel to recommend prices for new drugs that lack competition and are provided through Medicare and marketplace plans. The panel would consider other countries’ prices in making its recommendations.
Yet it’s not entirely clear how the Biden administration will handle Trump’s rule.
For one thing, the Trump administration skipped the normal rulemaking process, which requires weeks for public comment. Instead, it issued what is known as an “interim final rule” — a move typically only reserved for rules that need to go into place quickly.
That could make it difficult for the Biden administration to defend the policy in court if the pharmaceutical industry sues over the rule. The rule also relies on the government’s authority to experiment with Medicare payments, but the Trump administration wrote it so broadly that it reads more like a fundamental change to the overall program. That could be another weakness drugmakers could emphasize in court.
Still, the Biden administration may decide to stick with the interim final rule. Or, it could choose to walk it back and issue its own rule laying out an international price index. Representatives for Biden didn’t respond to a question about how the president-elect will handle it.
Either way, the situation will soon be out of the hands of Trump appointees, who will be replaced by Team Biden in two months.
“These initial rules will not be finalized under the Trump administration, so the Biden team will have a chance to finalize or not finalize based on what is consistent with their view,” Andy Slavitt, administrator of the Centers for Medicare and Medicaid Services under President Barack Obama, told me.
Biden is less enthused about another Trump administration rule — this one banning drug rebates.
Trump announced another major regulation on Friday, finalizing a ban on drug rebates in the Medicare program. It is slated to go into effect on Jan. 1,