President Donald Trump has taken a bold step by signing an executive order intended to reshape the pricing system of prescription drugs in the United States. This initiative is designed to slash costs for millions of Americans, expedite the approval of generic medications, and enhance the effectiveness of Medicare, the nation's public health program, while simultaneously offering certain concessions to the pharmaceutical industry.
The White House released a statement highlighting that this plan extends and deepens the administration's ongoing efforts to improve access to essential medications, while addressing structural issues within the pharmaceutical value chain.
Primary Focus on Price Reduction
Among the notable measures, the order directs the Department of Health and Human Services to:
- Enhance the Medicare Drug Price Negotiation Program, with the goal of exceeding the previous 22% savings achieved.
- Align Medicare payments for certain drugs with the actual acquisition costs for hospitals, potentially reducing spending by up to 35%.
- Standardize Medicare payments regardless of where patients receive care, aiming to cut prices by up to 60%.
Additionally, the order envisions extremely low prices for essential drugs aimed at vulnerable populations:
- The price of insulin for low-income patients and uninsured individuals will be reduced to just $0.03, plus a minor administrative fee.
- Injectable epinephrine will cost only $15.
Emphasis on Generics, Biosimilars, and Market Transparency
The order promotes a strong focus on competition, transparency, and efficiency by encouraging the use of generics and biosimilars, which are up to 80% cheaper than branded options. The federal government is instructed to expedite the FDA's approval of these products and to reassess certain prescription drugs for over-the-counter availability.
Furthermore, the order targets pharmacy benefit managers (PBMs) by demanding "greater disclosure of the fees PBMs pay to brokers."
Strengthening Medicare and Promoting Imports
The Trump administration proposes empowering states to secure better pricing within their public health systems. Measures include:
- Facilitating drug importation programs, similar to those authorized in Florida.
- Encouraging more efficient purchasing agreements for expensive drugs, like those used to treat sickle cell anemia.
Legislative Changes and Pharmaceutical Concessions
One of the most discussed aspects is the directive for Robert F. Kennedy Jr., the Secretary of Health, to collaborate with Congress to reform the current Medicare price negotiation program, established in 2022 under the Inflation Reduction Act.
Pharmaceutical companies have criticized this program, particularly the so-called "pill penalty," which limits the price of certain drugs for years. Trump has acknowledged these concerns, stating that "this penalty threatens to distort innovation and divert investment away from more accessible medications."
Trump aims for small-molecule drugs—such as pills and capsules, which comprise most medications—to have the same grace period (13 years) as biological drugs before they are subject to price negotiation.
According to Reuters, this represents a victory for the industry, which has long lobbied to relax negotiation timelines and widen profit margins.
Beyond Pricing: Importation and Federal Policies
In addition to the Medicare changes, the executive order calls on the FDA to support state applications for importing medications from Canada and other countries, encouraging more states to follow Florida's lead.
Simultaneously, it encourages collaboration with the Departments of Commerce and Justice, as well as the Federal Trade Commission, to combat anti-competitive behavior by manufacturers.
With this executive order, Trump reinforces his commitment to placing American patients at the heart of the healthcare system, albeit by incorporating long-standing demands of the pharmaceutical industry. The administration insists that the measures will yield savings exceeding those achieved in the initial phase of the negotiation program, though specific details have yet to be disclosed.
Reducing drug costs, democratizing access, and restructuring the pharmaceutical market are thus solidified as cornerstones of the current government's healthcare approach.
Frequently Asked Questions About Trump's Executive Order on Drug Prices
What is the main goal of Trump's executive order on drug pricing?
The primary objective of the executive order is to reduce the cost of prescription drugs for millions of Americans, enhance Medicare's efficiency, and expedite the approval of generic medications.
How does the order aim to improve Medicare's drug pricing?
The order directs the Department of Health and Human Services to enhance Medicare's Drug Price Negotiation Program, align payments with hospital acquisition costs, and standardize payments to reduce prices significantly.
What changes does the order propose for pharmaceutical imports?
The order encourages the FDA to support state applications for importing drugs from countries like Canada, aiming to expand such programs beyond Florida.