Lowering Drug Prices by Putting America First

Executive Order 13947 of July 24, 2020

Lowering Drug Prices by Putting America First

By the authority vested in me as President by the
Constitution and the laws of the United States of
America, it is hereby ordered as follows:

Section 1. Purpose. Americans pay more per capita for
prescription drugs than residents of any other
developed country in the world. It is unacceptable that
Americans pay more for the exact same drugs, often made
in the exact same places. Other countries' governments
regulate drug prices by negotiating with drug
manufacturers to secure bargain prices, leaving
Americans to make up the difference--effectively
subsidizing innovation and lower-cost drugs for the
rest of the world. The Council of Economic Advisers has
found that Americans finance much of the
biopharmaceutical innovation that the world depends on,
allowing foreign governments, many of which are the
sole healthcare payers in their respective countries,
to enjoy bargain prices for such innovations. Americans
should not bear extra burdens to compensate for the
shortfalls that result from the nationalized public
healthcare systems of wealthy countries abroad.

In addition to being unfair, high drug prices in the
United States also have serious economic and health
consequences for patients in need of treatment. High
prices cause Americans to divert too much of their
scarce resources to pharmaceutical treatments and away
from other productive uses. High prices are also a
reason many patients skip doses of their medications,
take less than the recommended doses, or abandon
treatment altogether. The consequences of these
behaviors can be severe. For example, patients may
develop acute conditions that result in poor clinical
outcomes or that require drastic and expensive medical
interventions.

In most markets, the largest buyers pay the lowest
prices, but this has not been true for prescription
drugs. The Federal Government is the largest payer for
prescription drugs in the world, but it pays more than
many smaller buyers, including other developed nations.
When the Federal Government purchases a drug covered by
Medicare Part B--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 need for affordable Medicare Part B drugs is
particularly acute now, in the midst of the COVID-19
pandemic, which has led to historic levels of
unemployment in the United States, including the loss
of 1.2 million jobs among Americans age 65 or older
between March and April of 2020. The COVID-19 pandemic
has also led to an increase in food prices, straining
budgets for many of America's seniors, particularly
those who live on fixed incomes. The economic
disruptions caused by the COVID-19 pandemic only
increase the burdens placed on America's seniors and
other Medicare Part B beneficiaries.

Sec. 2. Policy. (a) It is the policy of the United
States that the Medicare program should not pay more
for costly Part B prescription drugs or biological
products than the most-favored-nation price.

    (b) The “most-favored-nation price” shall mean
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 Organization for Economic
Cooperation and Development that has a comparable per-
capita gross domestic product.

Sec. 3. Ensuring the Most-Favored-Nation Price in
Medicare Part B. To the extent consistent with law, the
Secretary of Health and Human Services shall
immediately take appropriate steps to implement his
rulemaking plan to test a payment model pursuant to
which Medicare would pay, for certain high-cost
prescription drugs and biological products covered by
Medicare Part B, no more than the most-favored-nation
price. The model would test whether, for patients who
require pharmaceutical treatment, paying no more than
the most-favored-nation price would mitigate poor
clinical outcomes and increased expenditures associated
with high drug costs.

Sec. 4. General Provisions. (a) Nothing in this order
shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or
the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget
relating to budgetary, administrative, or legislative proposals.

    (b) This order shall be implemented consistent with
applicable law and subject to the availability of
appropriations.
    (c) This order is not intended to, and does not,
create any right or benefit, substantive or procedural,
enforceable at law or in equity by any party against
the United States, its departments, agencies, or
entities, its officers, employees, or agents, or any
other person.

    (Presidential Sig.)

THE WHITE HOUSE,

    July 24, 2020.