Trump Administration Would Import Foreign Price Controls

By John McManus, The McManus Group

Two weeks before the midterm election, the Trump administration announced a sweeping plan to subject physician-administered drugs in Medicare Part B to foreign price controls. The proposal, unveiled as an Advanced Notice of Proposed Rulemaking (ANPR) “demonstration project,” would subject half of the country to the mandatory pricing scheme but will ripple — like tidal waves — through the entire Medicare program. More formal rulemaking is expected next spring with implementation in 2020.

Medicare’s current average sales price (ASP) payment formula, which captures all price concessions and discounting in the U.S. market, would be replaced by a reference price based on the International Pricing Index (IPI) — composed of European countries plus Japan. The “demonstration” program would be phased in over five years, and when fully operational, U.S. pricing would have zero impact on Medicare reimbursement in tested areas (i.e., half of the country!).