Importance Score: 65 / 100 🔴
Trump Administration Unveils Measures to Curb Pharmaceutical Costs
In a move aimed at addressing drug prices, President Trump has signed an executive order outlining a series of actions intended to lower prescription costs, including facilitating the importation of pharmaceuticals from Canada by states. These directives represent the latest effort by the Trump administration to tackle the ongoing debate surrounding Medicare costs and access to affordable medications in the United States.
Modest Proposals with Potential Drawbacks
The newly announced policies are considered more restrained compared to previous, more ambitious proposals for reducing drug prices put forth during Mr. Trump’s initial presidential term. Notably, one of the directives within the executive order carries the potential to actually elevate drug prices.
This particular directive proposes collaboration between the Trump administration and Congress to modify a 2022 law. The alteration could weaken a negotiation program designed to curtail Medicare expenditures on frequently prescribed or high-cost medications. Experts suggest such a change may lead to increased governmental expenses by potentially delaying the timeline for certain medications to become eligible for Medicare price reductions.
Concerns over Medicare Spending
Depending on its implementation, adjustments to the Medicare negotiation program could substantially increase the program’s pharmaceutical spending by billions of dollars, when contrasted with the current legal framework. It is important to note that the existing negotiation program received approval from a Democratically controlled Congress and garnered support from former President Joseph R. Biden Jr.
The executive order stipulates that modifications to the Medicare price negotiation program must be “coupled with other reforms” to avert any overall cost escalations for Medicare and its beneficiaries. However, drug pricing specialists indicate that, with the exception of the Medicare negotiation proposal, the remaining directives within the executive order hold the potential to generate savings for both patients and government programs. They caution, however, that none of these actions constitute radical reforms expected to yield substantial savings.
vCard.red is a free platform for creating a mobile-friendly digital business cards. You can easily create a vCard and generate a QR code for it, allowing others to scan and save your contact details instantly.
The platform allows you to display contact information, social media links, services, and products all in one shareable link. Optional features include appointment scheduling, WhatsApp-based storefronts, media galleries, and custom design options.
Key Provisions of the Executive Order
The executive order encompasses several key provisions:
- Reduced Co-pays: One provision aims to decrease co-payments for Medicare recipients undergoing treatments like chemotherapy infusions at specific clinics and hospital outpatient facilities.
- Discounted Insulin and Epinephrine: Another provision seeks to expand access to significantly discounted insulin and epinephrine injections for certain lower-income individuals.
This executive order marks the most significant action undertaken by Mr. Trump’s second administration to date regarding drug pricing issues.
Broader Context: Tariffs and Industry Response
The announcement comes on the heels of Mr. Trump’s movement towards imposing tariffs on imported pharmaceuticals. Manufacturers are anticipated to attempt to pass these tariff costs onto consumers, potentially forcing government programs, employers, and patients to bear higher medication expenses and potentially worsening existing shortages of essential drugs.
Certain directives within the executive order, such as altering the Medicare negotiation program, necessitate congressional approval. The pharmaceutical industry has demonstrated staunch opposition to some aspects of the executive order while expressing support for others.
Absence of “Most Favored Nation” Pricing
President Trump has long voiced concerns over the disparity in drug prices, noting that the United States pays considerably more for the same medications compared to other affluent nations. Notably absent from the current executive order is a revival of the “most favored nation” pricing policy. This policy, proposed during his first term, aimed to align U.S. drug prices more closely with those paid by peer countries. Similar to several of Mr. Trump’s prior initiatives on drug prices, the “most favored nation” plan faced legal challenges and was ultimately halted by federal courts. Mr. Trump’s presidential campaign subsequently retracted the proposal last fall.
Examining Key Components of the Executive Order
A closer examination reveals the most noteworthy elements of Mr. Trump’s executive order:
Eliminating the “Pill Penalty”
The executive order directs the Secretary of Health and Human Services to collaborate with Congress to rectify a discrepancy in the treatment of certain drug types within the Medicare negotiation program.
Current law stipulates that pills and synthetically produced drugs become eligible for price reductions only after nine years on the market. Biologics, drugs derived from living cells and frequently administered via infusion, face a longer waiting period of 13 years before becoming eligible for price cuts.
Pharmaceutical manufacturers, having unsuccessfully challenged the program in court, have labeled this disparity a “pill penalty.” They contend that this distinction discourages medication development, as it shortens the period available to generate sales prior to price reductions taking effect, thereby depriving patients of access to novel treatments. The industry has actively lobbied for an extension of the exemption period from price cuts for pills to 13 years, aligning it with biologics.
Legislative efforts are underway in Congress to amend the law and ensure equal treatment for both drug categories.
The president’s executive order refrains from specifying the precise number of years each drug type should remain exempt from Medicare price reductions.
In a public statement, an official from PhRMA, the primary lobbying organization for the drug industry, affirmed the organization’s commitment to collaborating with the Trump administration and Congress to “advance common sense solutions that lower costs and improve access for Americans.”
Biden administration officials oversaw the initial round of negotiations under the program, resulting in price reductions slated to take effect in 2026. The Trump administration is currently managing negotiations this year for price reductions in 2027 for drugs, including the widely used weight-loss medications Ozempic and Wegovy.
Importing Drugs from Canada
The executive order mandates the Food and Drug Administration (FDA) to streamline the application process for states seeking to import lower-cost medications from Canada.
During his first term, Mr. Trump established a pathway for states to pursue such imports. Under the Biden administration, the FDA approved one importation program in Florida. However, as of late last year, Florida had not yet commenced importing drugs from Canada. The pharmaceutical industry remains opposed to this practice, citing concerns over profit reduction.
The potential imposition of tariffs on pharmaceuticals by Mr. Trump could diminish the potential savings associated with importing drugs from Canada compared to previous expectations.
Addressing Co-pay Disparities Across Clinic Settings
The executive order calls for the establishment of regulations to standardize the fees paid to physicians for administering medications to patients across various healthcare settings.
Currently, hospital-affiliated medical practices are often permitted to bill Medicare at higher rates compared to independent practices, even for identical services. Given that Medicare beneficiaries frequently bear a percentage of their medical expenses, these inflated visit costs are transferred to patients in the form of higher co-payments.
Efforts aimed at broadly equalizing such payments have been subject to bipartisan discussions in Congress for several years, but have faced resistance from hospitals, which assert the necessity of higher payments. Legislation enacted during the Obama administration partially addressed these payment discrepancies.
Promoting Generic and Biosimilar Drug Approvals
Mr. Trump instructed the FDA to formulate recommendations for accelerating the approval process for generic drugs and biosimilars, which serve as lower-priced alternatives to branded biologic medications.
The first biosimilar received approval in 2015, with numerous subsequent approvals granted. Initially, there was widespread optimism that biosimilars would displace patent-protected, brand-name biologics, such as Humira, commonly used to treat conditions like arthritis, which had contributed to escalating drug costs. However, patient adoption of biosimilars has been slow, and anticipated cost savings have not materialized as rapidly as initially projected.
Expanding Access to Insulin for Low-Income Individuals
Mr. Trump reinstated an executive order from his first term, directing community health clinics to offer insulin and epinephrine injections at significantly reduced prices to specific lower-income populations, including the uninsured.
Community health clinics initially expressed reservations when Mr. Trump first proposed this initiative in 2020. The Biden administration subsequently placed a freeze on the regulation, citing concerns about excessive administrative burdens placed upon these clinics.