(CNBC) – President Donald Trump signed an executive order Sunday that aims to lower prescription drug prices in the United States for certain drugs by linking them to those paid by other developed countries.
What Happened: The executive order mandates that for Medicare Part B and Part D prescription drugs or biological products, the U.S. will pay a “most-favored-nation price,” which is the lowest price a drug manufacturer charges to a member country of the Organisation for Economic Co-operation and Development.
The White House-issued order claims that the federal government is the largest buyer of prescription drugs in the world but yet it pays more than others.
“When the Federal Government purchases a drug covered by Medicare — the cost of which is shared by American seniors who take the drug and American taxpayers — it should insist on, at a minimum, the lowest price at which the manufacturer sells that drug to any other developed nation,” the order said.
Why It Matters: The latest executive order repeals a similar order Trump signed on July 24, but not implemented, as Trump sought to negotiate a deal with drug companies, National Public Radio reported.
White House spokesperson Judd Deere told NPR that the president gave drug companies “a month to come up with a counterproposal” but the negotiations didn’t result in an acceptable alternative.
Stephen Ubl, CEO of the drug industry lobbying group PhRMA said that the order was an “an irresponsible and unworkable policy” and gives foreign governments a say in how the U.S. provides access to treatments and cures, NPR noted.
Pfizer Inc PFE 1.26% CEO Albert Bourla said in July after Trump signed the first executive order that it would cause “enormous destruction” at a time the industry should be focussed on a vaccine, according to CNBC.
The New York-based drugmaker said over the weekend it is seeking regulatory approval to expand its late-stage COVID-19 vaccine trial. Bourla said the vaccine is expected to be distributed at the end of the year.