According to President Trump, CMS Administrator Mehmet Oz is a “tough hombre” who can bring down drug costs “like a rock.”
The Trump administration’s “Most Favored Nation” drug pricing policy is starting to take shape, with the president on Friday signaling that he wants Mehmet Oz, recently confirmed as administrator of the Centers for Medicare and Medicaid Services, to lead the negotiations.
Speaking at a Make America Healthy Again Commission event, President Donald Trump called Oz a “very tough hombre,” and charged him with leading the effort to bring down drug costs. “You’re going to have to get in and you’re going to fight,” Trump said. “If you do it, you can have, within a period of weeks, you’re going to have drug costs that drop like a rock.”
Meanwhile, the U.S. Customs and Border Protection (CBP) last Thursday reminded pharmaceutical companies to ensure that their imports and exports are properly declared. “Declaring incorrect value on import or export documentation submitted to the CBP is considered trade evasion,” the agency warned, “and CBP will pursue any violations to the fullest extent possible.”
While the CBP’s release on Thursday explicitly named Trump’s Most Favored Nation policy and the administration’s “strategy to lower health care costs in the United States,” it appears that the warning may have more to do with a recently emerged trade loophole that pharma companies could exploit to soften the blow of tariffs.
The first-sale rule is an obscure clause in U.S. customs law that allows companies to base their import duty calculations on the initial factory price of their product, rather than the final retail price, which is often inflated, as per CNBC. This move could allow importers to cut out costs associated with the profits of the middlemen.
These developments come as Trump tries one tack after another in an attempt to lower drug prices and boost domestic manufacturing in the pharma industry. At the center of this effort is the Most Favored Nation executive order, which he signed earlier this month, seeking to bring drug prices down in line with other similarly developed countries where these medicines are cheaper.
There remains substantial uncertainty regarding this policy. Earlier this month, the Department of Health and Human Services clarified that it will specifically be focusing on branded drugs and that it wants drugmakers to match medication prices in countries with a GDP at least 60% of the U.S.’s. The HHS has yet to release a list of drugmakers and drugs that the policy will affect.
In an opinion piece for BioSpace last week, Robert Albarano, partner at the international management consulting firm Arthur D. Little, said that Trump’s executive order is “legally vulnerable and politically fragile.” The executive order has no statutory authority to enact such price controls, according to Albarano, and potentially conflicts with certain Medicare and Medicaid statutes.
“Without enabling legislation, MFN remains vulnerable to legal challenge, repeal or administrative inaction,” he wrote.
Trump attempted to bring in MFN pricing during his first term, but the policy was ultimately overturned by the courts.
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