“President Biden’s “Executive Order on Lowering Prescription Drug Costs for Americans”

On October 14, 2022, President Biden signed an Executive Order on “Lowering Prescription Drug Costs for Americans” that directs CMMI to take “additional actions to complement the IRA and further drive down prescription drug costs.

The Executive Order directs CMMI to pursue prescription drug models:

The Secretary shall consider whether to select for testing by CMMI “new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs, including models that may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care.

But first, HHS must submit a report by Jan. 14, 2023

Within 90 days, the Secretary shall submit a report to the White House describing any models that the Secretary has selected, and include the Secretary’s plan and timeline to test any such models.

Following the submission of the report, the Secretary shall test any healthcare payment and delivery models discussed in the report.

Enhancing Oncology Model (EOM) mentioned

“Within HHS, the Center for Medicare and Medicaid Innovation (“Innovation Center”) tests health care payment and delivery models to improve health care quality and make the delivery of health care more efficient. In June 2022, the Innovation Center announced a new model to improve cancer care and lower healthcare costs for cancer patients, including prescription drug costs. The Innovation Center provides my Administration and the American people with a useful set of tools to help lower health care costs and improve quality of care, and its work can advance the continued policy of my Administration to lower the cost of prescription drugs.”

Notable comments from the president’s speech in Irvine, California include:

“This morning I issued an Executive Order directing the Department of Health and Human Services within 90 days to put a plan on my desk finding an additional way to lower prescription drug costs for seniors because there are other ways, we can do this in addition [to the IRA].”

“Now Congressional Republicans are telling us their number one priority if they win back the House and Senate is to repeal the Inflation Reduction Act. . . If Republicans in Congress have their way it will mean the power we just gave Medicare to lower prescription drug prices and other costs over time goes away, gone. $2,000 out-of-pocket cap on prescription drugs, gone.”

 

ADVI Angle

Timing of this announcement

Yesterday, the Bureau of Labor Statistics (BLS) announced an inflation rate increase of 8.2% over the past year. With the midterm elections looming, this is President Biden’s attempt to move the conversation away from the high inflation rate and towards drug pricing and the Inflation Reduction Act as a whole.

Significance of Executive Orders

Many Executive Orders lack teeth, as they often direct agencies to take actions for which they do not have the authority to execute.

But this Executive Order is significant as it directs CMMI – an agency with vast authority to enact Medicare reforms – to do something. CMMI has the authority to waive the entire Medicare statute when testing a demonstration per SSA §1115A(d)(1).

While the Executive Order mentions Medicaid, we would note that CMMI has very little authority over the Medicaid program.

Stay tuned for HHS’ report

Within 90 days, the HHS Secretary is required to release a report describing any drug pricing models coming out of CMMI. ADVI will be monitoring and providing any updates regarding this report and any future materials that may come out of CMMI. Please reach out to your ADVI account manager for more information.

 

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