October 20, 2020

Policymakers, officials question legality of Trump's proposed Rx discount cards

Daily Briefing

    Late last month, President Trump announced that his administration "in coming weeks" would send 33 million Medicare beneficiaries $200 discount cards to help them pay their Medicare copayments for prescription drugs. But the cards haven't yet been sent out—and policymakers and a top HHS official are raising concerns that the cards may violate federal law.

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    Trump announces Medicare drug discount cards to skepticism

    Trump last month announced his "America First Healthcare Plan," which included his administration's plans to send out the $200 discount drug discount cards to Medicare beneficiaries.

    "Nobody's seen this before, these cards are incredible, the cards will be mailed out in coming weeks," Trump said at the time.

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    A White House spokesperson at the time said that the federal government would launch the initiative under a Medicare demonstration program, so it does not need congressional approval. The spokesperson said the administration would get the $6.6 billion needed to fund the drug discount cards from savings generated under Trump's "most favored nations" drug pricing proposal. The proposal aims to lower the costs of prescription drugs in the United States by tying Medicare payments for certain drugs to the lowest prices offered in other developed nations.

    However, observers have noted that the Trump administration hasn't yet implemented the so-called "favored nations" proposal, so that proposal hasn't yet generated any savings to fund the new drug discount cards.

    A White House official who spoke to the Washington Post on the condition of anonymity around the time of Trump's announcement said the drug discount cards were a "last-minute thing that" originated from the office of White House Chief of Staff Mark Meadows, and the proposal was "still being worked out."

    Further, some observers and industry stakeholders criticized the effort as a politically motivated effort that wouldn't fix the broader issues of costly U.S. drug prices.

    Timing—and legality—of the cards are in question

    It's been three weeks since Trump first announced the initiative, and the effort "is mired in uncertainty over whether such drug discount cards are legal, proper, or will ever exist," the Post reports.

    According to the Post, Trump administration officials have been rushing to draft a proposal to implement the initiative, but "interviews and information from five individuals familiar with the work, all of whom spoke on the condition of anonymity to disclose internal matters," reveal that officials have been running into roadblocks.

    Top health care officials were given little notice that Trump was planning to announce the initiative, leaving them scrambling to come up with a plan to distribute the cards, the Post reports. Officials had to find a way to fund the initiative, as the "favored nations" proposal hadn't yet been implemented—and therefore hadn't generated any savings to cover the cards' costs. In a draft plan obtained by Politico last week, officials had proposed implementing the effort as a Medicare demonstration program and paying for the initiative with money from Medicare's trust funds.

    Meanwhile, some policymakers are questioning whether the Trump administration has the authority to distribute the cards.

    House Ways and Means Committee Chair Richard Neal (D-Mass.); House Energy and Commerce Committee Chair Frank Pallone (D-N.J.); and Sen. Ron Wyden (D-Ore.), the ranking member on the Senate Finance Committee, have asked the Government Accountability Office to review the initiative because they believe it "fails to comply with relevant federal laws and regulations." The lawmakers also sent a letter to HHS Secretary Alex Azar, in which they alleged Trump announced the effort in an "attemp[t] to buy votes just weeks before the [presidential] election using taxpayer dollars."

    Separately, three officials who spoke with Politico on the condition of anonymity said Robert Charrow, top lawyer at HHS, in an internal memo warned that the effort could violate federal election laws and advised that the department seek the Department of Justice's (DOJ) approval before moving forward.

    According to Politico, the concerns could keep the Trump administration from distributing the cards before the general election on Nov. 3. One of the officials who spoke with Politico said, "This plan is quickly becoming radioactive."

    And another one of the officials noted that "[e]very day that passes is one less day" to get the cards out before Election Day, Politico reports.

    Charrow did not respond to a request for comment, and DOJ did not immediately respond to a request for comment, Politico reports. An HHS spokesperson told Politico that the department doesn't "comment on internal deliberations."

    The White House also has declined to comment on the matter, the Post and Politico report.

    CMS in a statement to the Post said, "The [a]dministration is committed to lowering out of pocket costs for our nation's seniors. We will provide more information about the prescription drug cards soon" (Goldstein, Washington Post, 10/15; Diamond, Politico, 10/16; Armour, Wall Street Journal, 10/13).

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