[Federal Register Volume 85, Number 146 (Wednesday, July 29, 2020)]
[Presidential Documents]
[Pages 45759-45760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16625]


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  Federal Register / Vol. 85, No. 146 / Wednesday, July 29, 2020 / 
Presidential Documents  

[[Page 45759]]


                Executive Order 13939 of July 24, 2020

                
Lowering Prices for Patients by Eliminating 
                Kickbacks to Middlemen

                By the authority vested in me as President by the 
                Constitution and the laws of the United States of 
                America, it is hereby ordered as follows:

                Section 1. Purpose. One of the reasons pharmaceutical 
                drug prices in the United States are so high is because 
                of the complex mix of payers and negotiators that often 
                separates the consumer from the manufacturer in the 
                drug-purchasing process. The result is that the prices 
                patients see at the point-of-sale do not reflect the 
                prices that the patient's insurance companies, and 
                middlemen hired by the insurance companies, actually 
                pay for drugs. Instead, these middlemen--health plan 
                sponsors and pharmacy benefit managers (PBMs)--
                negotiate significant discounts off of the list prices, 
                sometimes up to 50 percent of the cost of the drug. 
                Medicare patients, whose cost sharing is typically 
                based on list prices, pay more than they should for 
                drugs while the middlemen collect large ``rebate'' 
                checks. These rebates are the functional equivalent of 
                kickbacks, and erode savings that could otherwise go to 
                the Medicare patients taking those drugs. Yet 
                currently, Federal regulations create a safe harbor for 
                such discounts and preclude treating them as kickbacks 
                under the law.

                Fixing this problem could save Medicare patients 
                billions of dollars. The Office of the Inspector 
                General at the Department of Health and Human Services 
                has found that patients in the catastrophic phase of 
                the Medicare Part D program saw their out-of-pocket 
                costs for high-price drugs increase by 47 percent from 
                2010 to 2015, from $175 per month to $257 per month. 
                Narrowing the safe harbor for these discounts under the 
                anti-kickback statute will allow tens of billions in 
                dollars of rebates on prescription drugs in the 
                Medicare Part D program to go directly to patients, 
                saving many patients hundreds or thousands of dollars 
                per year at the pharmacy counter.

                Sec. 2. Policy. It is the policy of the United States 
                that discounts offered on prescription drugs should be 
                passed on to patients.

                Sec. 3. Directing Drug Rebates to Patients Instead of 
                Middlemen. The Secretary of Health and Human Services 
                shall complete the rulemaking process he commenced 
                seeking to:

                    (a) exclude from safe harbor protections under the 
                anti-kickback statute, section 1128B(b) of the Social 
                Security Act, 42 U.S.C. 1320a-7b, certain retrospective 
                reductions in price that are not applied at the point-
                of-sale or other remuneration that drug manufacturers 
                provide to health plan sponsors, pharmacies, or PBMs in 
                operating the Medicare Part D program; and
                    (b) establish new safe harbors that would permit 
                health plan sponsors, pharmacies, and PBMs to apply 
                discounts at the patient's point-of-sale in order to 
                lower the patient's out-of-pocket costs, and that would 
                permit the use of certain bona fide PBM service fees.

                Sec. 4. Protecting Low Premiums. Prior to taking action 
                under section 3 of this order, the Secretary of Health 
                and Human Services shall confirm--and make public such 
                confirmation--that the action is not projected to 
                increase Federal spending, Medicare beneficiary 
                premiums, or patients' total out-of-pocket costs.

                Sec. 5. General Provisions. (a) Nothing in this order 
                shall be construed to impair or otherwise affect:

[[Page 45760]]

(i) the authority granted by law to an executive department or agency, or 
the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget 
relating to budgetary, administrative, or legislative proposals.

                    (b) This order shall be implemented consistent with 
                applicable law and subject to the availability of 
                appropriations.
                    (c) This order is not intended to, and does not, 
                create any right or benefit, substantive or procedural, 
                enforceable at law or in equity by any party against 
                the United States, its departments, agencies, or 
                entities, its officers, employees, or agents, or any 
                other person.
                
                
                    (Presidential Sig.)

                THE WHITE HOUSE,

                    July 24, 2020.

[FR Doc. 2020-16625
Filed 7-28-20; 2:00 pm]
Billing code 3295-F0-P