On April 15, President Donald Trump signed an Executive Order (EO) titled “Lowering Drug Prices by Once Again Putting Americans First,” outlining a renewed policy agenda to reduce prescription drug costs. The EO is framed as a continuation of drug-pricing reforms from President Trump’s first term. It touts past efforts such as expanding access to generics, launching a drug importation pathway and capping insulin costs for Medicare beneficiaries. It criticizes the Biden administration for walking back many of these initiatives and argues that the progress made during Trump’s first term has since been undone. The EO also targets the Inflation Reduction Act (IRA), particularly the Medicare Drug Price Negotiation Program, claiming it has led to inflated premiums, diminished coverage and distorted incentives around pharmaceutical innovation, and makes a nod to site-neutral policies.
The following alert provides a breakdown of the EO’s key directives and an overview of stakeholder reactions and potential future congressional action.
Section-by-Section Breakdown
The EO outlines a broad policy vision to lower drug costs, increase transparency and encourage innovation. While the EO does not immediately change regulations, it directs federal agencies to issue guidance, initiate rulemakings and deliver recommendations on a range of prescription drug issues. Key areas include reforming IRA implementation, especially the treatment of small molecule drugs under the “pill penalty,” as well as expanding drug importation, improving pharmacy benefit manager (PBM) fee transparency, reevaluating hospital drug reimbursement and promoting access to discounted insulin and epinephrine. Many of these proposals would require additional regulatory or congressional action to take effect, but the EO signals where the administration may focus next.
- Improving the IRA Drug Price Negotiation Program: The EO aims to correct the “pill penalty” by directing the Department of Health and Human Services (HHS) secretary to work with Congress to modify the Medicare Drug Price Negotiation Program to align the treatment of small molecule drugs with that of biologics. Currently, small molecule drugs can become subject to negotiated prices four years earlier than biologics, with negotiated prices taking effect after nine years on the market compared to 13 for biologics. The administration argues this creates an imbalance that distorts investment and discourages innovation in small molecule development. The EO does not specify how alignment should occur, leaving open whether timelines would be extended, shortened or equalized. In the 119th Congress, Reps. Greg Murphy (R-NC), Don Davis (D-NC) and Richard Hudson (R-NC) have reintroduced the Ensuring Pathways to Innovative Cures (EPIC) Act (R. 1492) to address the “pill penalty” and ensure continued research and development (R&D) investments into small molecule medicines. The bill was previously introduced in the 118th Congress by current House Energy and Commerce Committee Chairman Brett Guthrie (R-KY), signaling the likelihood of the committee’s support. Sens. Thom Tillis (R-NC) and Ted Budd (R-NC) are leading the Senate companion (S. 832) to equalize the negotiation period. The EPIC Act has garnered bipartisan, bicameral support in the past, so with the backing of President Trump, it has further momentum, increasing the likelihood it could be signed into law. The ORPHAN Cures Act, which would keep orphan drugs exempt from drug price negotiations, could also be considered. Additionally, within 60 days of the order, the HHS secretary is directed to propose and seek comment on guidance for the 2026–2028 negotiation cycles. The guidance is intended to improve transparency in the program, prioritize high-cost drugs and minimize any negative impacts of the maximum fair price on pharmaceutical innovation.
- Stabilizing and Reducing Part D Premiums: Within 180 days, the EO directs the assistant to the president for domestic policy, in coordination with the HHS secretary, the director of the Office of Management and Budget (OMB) and the assistant to the president for economic policy, to provide recommendations to the president on how best to stabilize and reduce Medicare Part D premiums. The administration attributes increased premiums and diminished plan choices to the IRA’s redesign of the Part D program that the Biden administration implemented, particularly in connection with the Medicare Drug Price Negotiation Program. While the EO does not propose immediate changes, it flags premium affordability as an area of concern.
- Accelerating the Generic and Biosimilar Markets: Within 360 days, the EO directs the HHS secretary to develop and implement a rulemaking plan and select a payment model to test strategies to obtain better value for high-cost prescription drugs and biologics covered by Medicare. Furthermore, within 180 days, the EO directs HHS to issue a report providing recommendations to accelerate the approval of generics, biosimilars, combination products and second-in-class brand-name medications. It also directs the agency to provide recommendations on how to improve the process of reclassifying prescription drugs as over-the-counter medications.
- Reevaluating the Role of Middlemen: Within 90 days, the EO directs the assistant to the president for domestic policy, HHS secretary, OMB director and assistant to the president for economic policy to provide recommendations to the president on how best to promote a more competitive, efficient, transparent and resilient pharmaceutical value chain to deliver lower drug prices. Within 180 days, the EO directs the Department of Labor to propose regulations to improve employer health plan fiduciary transparency into the direct and indirect compensation received by PBMs pursuant to the Employee Retirement Income Security Act of 1974 (ERISA). Lawmakers have been especially focused on PBM reform, with dozens of proposed bills introduced last Congress. Although passing stand-alone legislation in this space is unlikely, Congress could include PBM reform policies from the December health care package or in the reconciliation package.
- Promoting Oversight in Medicaid Drug Payments: Within 180 days, the EO directs relevant agencies to provide recommendations on how to ensure manufacturers pay accurate Medicaid drug rebates, promote innovation in Medicaid drug payment methods, link payments for drugs to value and support states in managing drug spending.
- Increasing Prescription Drug Importation: Within 90 days, the EO directs the Food and Drug Administration (FDA) commissioner to take steps to streamline and improve the Importation Program under section 804 of the Federal Food, Drug and Cosmetic Act to make it easier for states to obtain approval. This directive builds on the drug importation policy advanced during President Trump’s first term and may require updates to current FDA regulations. The first Trump administration finalized a similar rule allowing states to import prescription drugs specifically with Canada, after which the Biden administration approved the first program in Florida. Since then, several other states have submitted proposals, including Colorado, New Mexico and Vermont.
- Ensuring Access to Insulin and Epinephrine: Within 90 days, the EO directs the HHS secretary to take action to ensure that future grants under the Public Health Service Act are conditioned on specific patient access requirements. Federally qualified health centers (FQHCs) that receive such grants must offer insulin and injectable epinephrine to eligible low-income individuals at or below the 340B price (plus a minimal administrative fee). This policy applies to patients who are uninsured, have high cost-sharing or have unmet deductibles, reviving a previous Trump-era initiative.
- Combating Anti-Competitive Behavior by Drug Manufacturers: Within 180 days, the EO directs HHS to conduct joint public listening sessions alongside the Department of Justice, Department of Commerce and Federal Trade Commission, as well as issue a report with recommendations to reduce anti-competitive behavior by pharmaceutical drug manufacturers.
- Addressing Payment Disparities: Within 180 days, the EO directs HHS to evaluate and possibly propose regulations to ensure payments within the Medicare program do not encourage a shift in drug administration volume away from “less costly physician office settings to more expensive hospital outpatient departments (HOPDs).” The EO is a nod to the previously proposed site-neutral policies that were included in the House-passed Lower Costs, More Transparency Act (R. 5378), as well as the bipartisan health care deal released in December. According to White House sources, the Trump administration wants to align payments across health care settings, so patients are not charged more for a building labeled as a HOPD than a physician’s office.
- Accounting for Acquisition Costs: The EO directs the HHS secretary to publish a plan within 180 days to conduct a survey under the Social Security Act to determine the hospital acquisition cost for covered outpatient drugs. HHS will need to consider and propose adjustments to align Medicare payments with actual acquisition costs, consistent with budget neutrality and other statutory requirements. This provision is intended to address concerns about inflated Medicare reimbursement for drugs purchased at a discount, particularly under the 340B program, and reflects ongoing interest in reducing site-of-care cost disparities across outpatient settings.
One notable policy that was not explicitly stated in the EO, which the Trump administration tried to implement during Trump’s first term, is the most favored nation system of international reference pricing for certain drugs. The EO hinted at this policy by stating that pharmaceutical manufacturers “charged patients in our Nation more than those in other countries for the exact same prescription drugs, often made in the exact same places.” This mention could allude to future rulemaking on this policy.
Stakeholder Reactions
Reactions to the EO have varied among political and industry stakeholders. Ranking Member Ron Wyden (D-OR) of the Senate Finance Committee, which has jurisdiction over IRA drug pricing implementation, criticized the EO in a public statement. He argued that it undermines the drug price negotiation authority established under the IRA and favors pharmaceutical interests. Other Democratic voices have echoed similar concerns that the EO could weaken provisions intended to make prescription drugs more affordable.
In contrast, Rep. Greg Murphy (R-NC) praised the EO in a statement, discussing its efforts to address harmful effects of the IRA on innovation and access. He pointed to the proposed partnership with Congress to repeal the “pill penalty” and additional efforts to increase transparency as important steps toward patient-centered reform.
Early industry and stakeholder reactions have focused heavily on the EO’s proposal to align negotiation timelines for small molecule and biologic drugs. Some viewed this as a long-sought correction that could restore balance to investment incentives, while others cautioned that the change could result in unintended spending and price increases. Other provisions, such as those related to PBM transparency and drug importation, have also drawn attention, though further actions are necessary for any of the proposed reforms to come to fruition.
On the Horizon
While the EO signals President Trump’s policy priorities, most of its provisions will require further regulatory or congressional action to take effect. Notably, President Trump’s recognition of key health care issues, such as the “pill penalty” and site-neutral payment policies, suggests a renewed focus on addressing long-standing concerns around the high costs of care in the health care system. Given these signals, we anticipate that the most meaningful developments in these areas are likely to come from Congress over the next several months, as lawmakers begin to translate the Trump administration’s policy goals into actionable reforms.
