Trump's New Order Targets Drug Pricing Transparency And Medicare Cost Reduction
US President Donald Trump issued a multi-part executive order on Tuesday to lower drug prices and reduce Medicare costs.
Within 60 days, the Secretary of Health and Human Services is instructed to seek guidance for the Medicare Drug Price Negotiation Program for initial price applicability year 2028 and how drugmakers should implement the set prices in 2026, 2027, and 2028.
- This guidance will focus on greater transparency, selecting high-cost drugs, and safeguarding pharmaceutical innovation.
- Additionally, the administration seeks to eliminate a key disparity in how Medicare treats small-molecule drugs compared to biologics, discouraging investment in more affordable treatments.
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The White House is also targeting the rising costs seniors face under Medicare. A new payment model will be tested within a year to obtain better value for high-cost drugs and biologicals, including those not subject to price negotiations.
Further, the administration wants to align Medicare payments with actual hospital acquisition costs through a national survey, with potential reimbursement adjustments following the results.
To reform Medicaid drug pricing, the administration will develop recommendations linking drug payments to their value and ensuring accurate rebate payments from manufacturers. The initiative also aims to assist states in managing spending while promoting innovation in Medicaid reimbursement.
Affordability for life-saving medications is another key focus: Community health centers will be required to offer insulin and epinephrine at or below discounted 340B prices to low-income individuals with high out-of-pocket costs or no insurance, with compliance tied to eligibility for future federal grants..
To address price manipulation in the supply chain, the administration calls for reevaluating middlemen roles, such as pharmacy benefit managers, and seeking transparency in their compensation structures. Within 90 days, recommendations to promote a more efficient pharmaceutical market are expected.
Other planned reforms include accelerating FDA approvals for generics and over-the-counter conversions, streamlining the drug importation program, and ensuring Medicare payments do not incentivize hospital-based care over less costly physician offices.
Lastly, federal agencies will investigate anti-competitive practices by drug manufacturers, with public listening sessions and policy recommendations expected within six months.
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