Trump orders changes to Medicare drug price negotiations
President Donald Trump signed an executive action Tuesday directing the Department of Health and Human Services (HHS) to work with Congress to update the Medicare drug price negotiation program, which was enacted as part of the 2022 Inflation Reduction Act.
The program allows the federal government to negotiate prices on specific drugs, ultimately lowering out-of-pocket costs for patients. A provision in the law allows new medications to be added to the list each year, and certain types of new drugs become eligible for negotiated pricing based on established timelines.
Now, under Trump’s direction, HHS may be looking to revamp some specifics of the program, with the stated aim of “eclipsing the 22% in savings achieved in the program’s first year” and lowering prescription costs for seniors.
The White House released a statement outlining parts of the plan, including increasing the availability of generic drugs and implementing new rules that would require pharmacy benefit managers (PBMs) to disclose fees they “pay to brokers for steering employers to utilize their services.”
The order also calls for aligning Medicare payments for certain prescription drugs with the actual acquisition costs paid by hospitals—costs the White House says can be up to 35% lower than what the government currently pays.
Under the original law, passed during former President Joe Biden’s administration, the government was authorized to negotiate prices for 10 drugs, with the new pricing set to take effect in 2026. Currently, HHS under Trump is seeking to add 15 more drugs to the list for the 2027 calendar year.
Changes could be profitable for drugmakers
As Reuters pointed out, drug manufacturers have been lobbying for extensions to the timelines put in place for Medicare drug price negotiations, arguing that current thresholds stifle innovation. Under the present wording of the law, the government is allowed to negotiate the price of complex biologic (or biotech) drugs after 13 years on the market, and after 9 years for those taken orally.
Raising those numbers is a goal of the pharmaceutical lobby, as negotiated prices mean lower profits.
For now, how potential changes to the law will impact its effectiveness—and whether any changes ultimately align with Trump’s stated goals—remains to be seen.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.