On April 15, 2025, President Trump issued an executive order titled “Lowering Drug Prices by Once Again Putting Americans First.” The order reaffirms and seeks to expand on policy initiatives introduced during the president’s first administration, with the stated goal of reducing prescription drug costs and a focus on aligning U.S. drug prices with those abroad. The order outlines a wide range of directives to federal agencies related to Medicare pricing, generic and biosimilar competition, pharmacy benefit manager practices, and payment models. While implementation details are forthcoming, the scope of the order suggests that drug manufacturers should be prepared for increased regulatory activity.
Below, we highlight some of the order’s key provisions and their potential implications for drug manufacturers.
Potential reforms to the Inflation Reduction Act
The order instructs the Department of Health and Human Services (HHS) to issue within 60 days updated guidance related to the Medicare Drug Price Negotiation Program — a key component of the Inflation Reduction Act (IRA), with an emphasis on improving transparency in the program and prioritizing the selection of high-cost prescription drugs. Specifically, the order addresses an aspect of the IRA known as the “pill penalty” whereby small molecule prescription drugs are open for price controls four years earlier than for large molecule drugs. The order seeks to eliminate the so-called “pill penalty” by calling for alignment in how small molecule drugs and large biological drugs are treated under the program. The order also instructs the HHS secretary to work in coordination with other government advisors and directors to provide recommendations to the president within 180 days of the order on how best to stabilize and reduce Medicare Part D premiums.
Increasing drug importation
The order instructs that within 90 days, the HHS secretary, through the commissioner of the Food and Drug Administration (FDA), shall take steps to streamline drug importation pathways under Section 804 of the Federal Food, Drug, and Cosmetic Act to “make it easier for [s]tates to obtain approval without sacrificing safety or quality.” Section 804 allows pharmacies and wholesalers to import certain prescription drugs from Canada if the sponsor can show that the importation program will result in a significant reduction in the cost of eligible prescription drugs for American consumers without posing additional risks to public health and safety. Importation proposals then undergo a rigorous, multistep FDA review and approval process.
Accelerating generic and biosimilar approval
The order instructs that within 180 days, the HHS secretary, through the commissioner of FDA, shall issue a report providing administrative and legislative recommendations to “accelerate approval of generics, biosimilars, combination products, and second-in-class brand name medications,” and to “improve the process through which prescription drugs can be reclassified as over-the-counter medications.”
Investigating “anti-competitive behavior by prescription drug manufacturers”
The order instructs the HHS secretary to investigate and issue within 180 days a report with recommendations to reduce “anti-competitive behavior from pharmaceutical manufacturers” by conducting “joint public listening sessions with the appropriate personnel from the Department of Justice, the Department of Commerce, and the Federal Trade Commission.”
Takeaways
Elements of the order require regulatory and legislative follow-through to implement. While it remains to be seen what immediate impacts the order will have on the pharmaceutical industry, certain elements of the order may precipitate significant shifts in competition and investment in small molecule prescription drug innovation. Drug manufacturers should continue to monitor proposed rulemaking and proactively evaluate how these policy shifts could impact their product pipelines and lifecycle management strategies. We will continue to monitor and provide updates as regulations and reports responding to this executive order issue.
