Trump's Executive Order on Lowering Pharmaceutical Costs Revives Debated Policies

President Trump's latest executive order on reducing pharmaceutical costs is not a new initiative, but rather a revival of policies from his first term and changes to programs started during the Biden administration. The order's implementation details are shrouded in uncertainty, but polling consistently shows that voters want lower drug costs. The Trump administration's efforts to make this happen are being met with skepticism, as critics argue that the changes will only lead to higher prices for patients and taxpayers.

Key Takeaways:

• The executive order asks HHS to work with Congress to fix the "pill penalty," a distortion in the negotiations for small-molecule drugs that exempts synthetic drugs from negotiation for nine years after they hit the market.
• The order will realign the negotiation period for small-molecule and biologic drugs, but does not specify for how long.
• The administration wants to learn from the Biden team's experience in the negotiation process before implementing changes.
• Trump is directing HHS to reinstitute a program to provide discounted insulin through federally qualified health centers.
• The order also calls for launching a pilot project to get better value for high-cost therapeutics, streamlining the approval of generic and biosimilar drugs, and facilitating more state plans to import drugs.
• Trump has instructed HHS to survey hospitals on their drug acquisition costs and consider policies to align Medicare payment with those costs.

Statistics:

• 50% of medicine spending is currently going to insurers, PBMs, and hospitals, which the administration wants to use to lower costs for patients.
• Trump is expected to impose tariffs on pharmaceuticals produced overseas in the coming weeks, which may increase drug costs and exacerbate shortages.
• A survey conducted by the Conference Board in 2020 found that 64% of Americans believed that lowering prescription drug prices should be a top priority for policymakers.
• In 2020, OMB reported that Medicare spends approximately $123 billion per year on prescription drug spending.

Sources:

• Axios, "Trump order to lower drug prices revives debate" (no date)
• Axios, "Midterm election: Voters want lower health care costs, especially drug prices" (October 20, 2022)
• Axios, "Trump's executive order on drug prices: The fine print" (no date)
• PhRMA, "PhRMA Statement on President Trump's Executive Order to Reduce Medicine Costs" (no date)
• K&L Gates, "Federal Courts Block Implementation of Most-Favored Nation Drug Pricing Rule" (December 29, 2020)
• Conference Board, "State of the Industry: Prescription Drug Price Controls" (no date)
• CNBC, "Trump's plan to impose tariffs on pharmaceuticals could raise costs and worsen shortages" (April 11, 2025)