Introduction of International Pricing Index to Lower Drug Costs Could Spark Legal Challenge

Merck is one of three American pharmaceutical companies that filed suit against the U.S. Department of Health and Human Services in June over a new federal regulation that mandates disclosure of the list price of prescription medications aimed directly at consumers in television advertisements. Now, a new proposal from the Trump administration to lower prescription drug prices is set for a legal battle, according to Merck CEO Ken Frazier.

The proposed international pricing index (IPI) would set prices for what Medicare pays for drugs based on the prices set in other countries. Mr. Frazier said that this practice concerns him because importing price controls from other countries could threaten innovation and patient access in the U.S. However, the Trump administration claims the IPI will even the playing field; other developed nations, often with single-payer systems, pay far less than the U.S. for the same medicines, a problem President Donald Trump calls “global freeloading.”

“We tell incomplete stories about those markets,” Mr. Frazier countered, noting that some countries ration treatments available to patients: Britain, for example, has an agency that can withhold the use of approved new medicines based on their cost, and suffers lower survival rates of lung cancer.

A proposed version of the IPI is expected in August.

Source: Reuters, June 20, 2019.