President Donald Trump earlier this week signed an executive order directing the Department of Health and Human Services to take multiple steps to address the soaring cost of prescription drugs. “It is time to restore the progress our nation made in my first term to deliver lower prescription drug prices by putting Americans first and making America healthy again,” the order said.
The directive includes an effort to rein in the power of pharmacy benefit managers, who have drawn bipartisan scrutiny in recent years.
“Within 90 days of the date of this order, the assistant to the president for domestic policy, in coordination with the secretary, the OMB director and the assistant to the president for economic policy, shall provide recommendations to the president on how best to promote a more competitive, efficient, transparent and resilient pharmaceutical value chain that delivers lower drug prices for Americans,” the order said under the subhead Reevaluating the Role of Middlemen.
The executive order was praised by an unlikely source – Mark Cuban, who started Cost Plus Drugs in 2022 in an attempt to control prices through direct-to-consumer transparency. Cuban, who often has been critical of Trump, reacted to the order in a social media post: “Gotta be honest. The @realDonaldTrump EO on health care and in particular, drug pricing, could save hundreds of billions.”
Cuban elaborated on six ways this could happen:
- “Divorce formularies from PBMs. Require them to come from independent organizations with no economic incentive from the formulary. Make them about wellness, not pay for play like a grocery store endcap.”
- “Require PBMs to provide all claims data to employers, states and manufacturers. The manufacturers need this to provide better results. It’s insane they don’t have this data to analyze and improve patient results.”
- “Remove the specialty tier and the requirement to buy from any specified pharmacy. There is nothing special about specialty drugs. They call them special to jack up the price. And of course, have them divest any that they do.”
- “Require that all pharmacies get fully reimbursed for brand drugs and get rid of the generic cost ratio, which allows distributors to jack up pricing on generics with the threat of chargebacks and more.”
- “Remove confidentiality clauses. They prevent companies from talking to manufacturers.”
- “Stop biosimilar substitution calls. PBMs know that they need to find new sources of margin. They do it by white labeling their own biosimilar versions. That’s fine. But because that’s where all the margin is, they will put a low cost biosim on the formulary, and when they get a script for the lower cost option, they will have someone call the prescribing doctor to switch to their more expensive version they make more money on.”
Drug prices have increased sharply in recent years. Between January 2022 and January 2023, prices rose more than 15% and reached an average of $590 per drug product, according to HHS.