On July 24, 2020, President Trump enacted several executive orders attempting to lower drug prices for consumers. Of the three released, one has particular relevance to the fields of insurance company relationships and drug price negotiations.

Drug prices are often set by negotiation between the manufacturers and negotiators/middlemen hired by insurance companies. These negotiators reduce the list price of the drug by a significant amount (and usually receive a handsome rebate check as compensation) but Medicare Part D users are often still stuck with the higher list price. This executive order seeks to remedy this imbalance by mandating that any discounts offered on drugs to negotiators/middlemen be extended to Medicare Part D end users. This means that these negotiators are now effectively arguing not only on their own behalf, but also on the behalf of all end users of these products.

This order is meant to decrease pharmaceutical costs for Medicare Part D participants by passing on these discounts given to these negotiators/middlemen to the end consumers. The executive order voices a desire to edit safe harbor provisions that protect rebate checks earned by these negotiators and to lessen the self-enriching kickback deals made at the expense of the consumers. The Secretary of Health and Human Services shall amend the law to outlaw rebate checks received by drug price negotiators as illegal “kickbacks” unless such discounts are also applied to the end user.  Department of Health and Human Services still must verify that this order will not inadvertently result in higher premiums for Medicare Part D users.

You can read the entire executive order HERE.