President Trump signs executive order to lower Medicare prescription drug prices while making significant changes to the Biden-era negotiation program.
Quick Takes
- Trump’s executive order aims to expand Medicare’s drug price negotiation program while modifying the framework established under the Inflation Reduction Act.
- The plan includes allowing states to import drugs from Canada and addressing the imbalance between small molecule drugs and biologics in the current program.
- The administration pledges to deliver greater savings than the current program, but analysts note some provisions could potentially increase costs.
- Trump’s directed changes would take effect in 2027, compared to the Biden-negotiated prices scheduled for 2026.
- Health and Human Services Secretary Robert F. Kennedy Jr. is tasked with implementing the reforms while working with Congress on legislative changes.
Trump’s New Approach to Medicare Drug Pricing
President Trump signed an executive order aimed at lowering prescription drug prices for Medicare recipients, building upon but significantly modifying the negotiation framework established by the Biden administration. The executive action directs several federal agencies to take steps intended to reduce medication costs for seniors and individuals with disabilities. Among the key provisions is the authorization for states to import cheaper prescription drugs from Canada, a policy Trump had previously pursued during his first term in office.
Health policy experts note that the new approach differs from Trump’s first-term policies and makes substantial changes to the Medicare drug price negotiation program created through the Inflation Reduction Act of 2022. The administration claims these modifications will deliver greater savings to Medicare beneficiaries, though the first negotiated prices under Trump’s plan wouldn’t take effect until 2027, one year after the Biden-negotiated prices are scheduled to begin.
Potential Benefits and Concerns
The executive order instructs the Food and Drug Administration to facilitate state drug importation programs and streamline approval processes for generic drugs and biosimilars, which could increase market competition. Additionally, the administration plans to revive a program providing low-cost insulin and epinephrine to low-income individuals. The order also seeks to align Medicare drug prices with hospital acquisition costs and standardize payments across different care settings.
President Trump signed an Executive Order and announced actions to lower prescription drug prices:
-Deliver lower drug prices for Medicare
-Provide massive discounts to low-income patients for life-saving medications
-Facilitate importation programs to save states millions in… pic.twitter.com/qRf51KveWo— Libs of TikTok (@libsoftiktok) April 16, 2025
While the administration frames these changes as improvements, some aspects of the executive order have raised questions among healthcare policy experts. One directive could potentially alter the timeline for when certain drugs become eligible for Medicare price cuts, which some analysts suggest might increase government costs by billions compared to the current law. The order itself acknowledges this concern, stating that changes to the Medicare price negotiation program should include reforms to prevent increased costs to Medicare and its beneficiaries.
Addressing Program Imbalances
A significant focus of the executive action addresses what the administration describes as an imbalance in Medicare’s drug price negotiation program between small molecule drugs (conventional prescription medications) and biologics (complex drugs made from living organisms). Health and Human Services Secretary Robert F. Kennedy Jr. has been instructed to work with Congress to address this disparity, which the administration believes unfairly impacts different types of medications within the negotiation framework.
The current Medicare negotiation program, created under the Inflation Reduction Act, has already negotiated prices for 10 drugs in 2024, with 15 more medications scheduled for negotiation this year. Trump’s approach would maintain this framework while making structural changes designed to expand the program’s reach. The administration’s stated goal is to achieve greater savings for Medicare recipients by enhancing the government’s negotiating position with pharmaceutical companies.
Implementation Timeline and Next Steps
The full impact of Trump’s executive order will unfold gradually, with most significant price changes not taking effect until 2027. This creates an unusual situation where two different administrations’ drug pricing initiatives will be implemented in sequence, with the Biden-negotiated prices beginning in 2026 and Trump’s modifications following a year later. Federal agencies are now tasked with developing the specific regulatory frameworks needed to implement these changes, while Secretary Kennedy will engage with Congress on potential legislative adjustments to address the biologic versus small molecule drug imbalance.
Beyond Medicare negotiations, the order directs the FDA to accelerate approval of generic medications and biosimilars to increase market competition. This multi-faceted approach combines regulatory changes, negotiation strategies, and market-based solutions in an effort to address prescription drug affordability for Medicare beneficiaries, who represent one of the largest demographics of medication consumers in the United States.
Sources:
Trump Seeks to Lower Drug Prices Through Medicare and Some Imports
Trump signs healthcare executive order that includes a win for pharma companies
Trump signs executive action to lower drug prices
