On April 15, 2025, President Trump signed an executive order (EO) with the aim of reducing the cost of prescription drugs. Although the EO is wide-ranging, its main provisions include:
- Directing the Secretary of the U.S. Department of Health and Human Services (the Secretary) to seek comments on guidance for improving transparency and drug selection in the Medicare Drug Price Negotiation Program provisions of the Inflation Reduction Act (the Program) while minimizing negative impacts on drug development and pharmaceutical innovation.
- Directing the Secretary to work with Congress to modify the Program to align the treatment of small molecule drugs with that of biologics. Biologics currently must be on market for 13 years prior to becoming eligible for price negotiation, as compared to the nine-year eligibility time period for small molecule drugs.
- Aligning Medicare payments for outpatient drugs with hospital acquisition costs of such outpatient drugs.
- Conditioning grants to community health centers on the health center’s establishment of practices to make insulin and injectable epinephrine available at or below the discounted price paid by the health center under the 340B Prescription Drug Program (plus a minimal administration fee) to certain low-income individuals.
- Directing the Secretary, through the Commissioner of Food and Drugs, to improve the U.S. Food and Drug Administration Importation Program, which allows states to obtain approval to import drugs from foreign countries.
- Directing the Secretary to evaluate and, if appropriate, propose site neutral regulations to ensure Medicare is not encouraging a shift in drug administration volume away from less costly doctor’s offices to more costly hospital settings.
The directives set forth in the EO are slated for implementation within the next year. Many of the directives, particularly those relating to drug prices and price negotiations, require legislative action by Congress. Bipartisan legislation has already been introduced in the House that would align the timeline for eligibility and price negotiation for small molecule drugs with biologics as set forth in the EO. However, many other provisions in the EO, such as the Importation Program, have historically not received broad bipartisan support.
Despite the hope of some pharmaceutical manufacturers to the contrary, the Trump administration has continued the Biden-era regulations relating to the Program and asserts that doing so could lead to greater savings than originally projected.
Interested parties should continue tracking legislative developments to discern which of these provisions will materialize.
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