New Executive Action Targets Negotiations for Cheaper Medicare Drug Prices

President Trump signs executive order restructuring Medicare drug negotiations, promising lower costs for seniors while potentially modifying parts of Biden-era regulations.

Quick Takes

Trump’s executive order aims to reduce prescription drug prices for Medicare beneficiaries while altering aspects of the Inflation Reduction Act’s negotiations framework.
The administration promises greater savings than the previous administration, though some analysts warn certain provisions could potentially increase costs.
The order directs HHS Secretary Robert F. Kennedy Jr. to work with Congress to address imbalances between small molecule drugs and biologics in the negotiation program.
The plan includes reviving a program for low-cost insulin and epinephrine for low-income individuals and facilitating state drug importation from Canada.
Trump’s negotiated prices would become available in 2027, a year later than those negotiated under the Biden administration.

Building on Previous Medicare Drug Pricing Efforts

President Trump’s recent executive order on Medicare drug pricing represents his administration’s strategy to address the persistent problem of high prescription costs for America’s seniors. The action builds upon the framework established by the Inflation Reduction Act passed in 2022 under the previous administration, which created the first-ever Medicare drug price negotiation program. Under that program, Medicare has already negotiated prices for 10 medications in 2024, with an additional 15 drugs scheduled for negotiation this year. Trump’s approach aims to modify aspects of this program while maintaining its core purpose of reducing costs for beneficiaries.

The new executive action continues Trump’s focus on drug pricing from his first term, though analysts note the current proposals are more modest than his previous efforts. One key component allows states to import medications from Canada, a policy Trump had previously championed. The administration has directed the FDA to facilitate these state importation programs and streamline approval processes for generic medications and biosimilars, potentially creating more competition in the pharmaceutical marketplace. These measures aim to provide alternative pathways to lower drug costs beyond direct Medicare negotiations.

Potential Changes to Negotiation Timelines

A significant aspect of the executive order involves potential modifications to how Medicare drugs become eligible for price negotiations. According to reports, the changes could alter the timeline for when certain medications would qualify for Medicare price cuts. This restructuring has raised concerns among some policy analysts who suggest it might delay negotiations for certain drugs, potentially increasing government costs compared to the current law structure. The executive order does, however, specifically instruct that any changes should include reforms to prevent increased costs to Medicare and its beneficiaries.

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 Biden administration’s negotiated prices are set to take effect in 2026, Trump’s modifications would make his negotiated prices available beginning in 2027. The administration maintains that despite this later implementation date, its approach will ultimately deliver greater savings for Medicare beneficiaries. This timing difference represents one of several distinctions between the two administrations’ approaches to addressing prescription drug costs through the Medicare program. The practical impact of this one-year delay remains a subject of debate among healthcare policy experts.

Addressing Pharmaceutical Imbalances and Additional Initiatives

A key focus of Trump’s executive action is addressing what the administration identifies as an imbalance in Medicare’s drug price negotiation program between small molecule drugs (traditional pharmaceuticals) and biologics (complex drugs made from living organisms). The order instructs Health and Human Services Secretary Robert F. Kennedy Jr. to collaborate with Congress on this issue. Additionally, the action seeks to align Medicare drug prices with hospital acquisition costs and standardize payment across different care settings, potentially eliminating pricing disparities that currently exist in the system.

The administration has also announced plans to revive a program providing low-cost insulin and epinephrine to low-income individuals, addressing two medications that have faced scrutiny for their high consumer costs. This initiative would specifically target beneficiaries who struggle most with medication affordability. However, analysts note that potential tariffs on imported pharmaceuticals, a separate policy consideration of the administration, could potentially increase consumer costs in other areas, creating a complex policy landscape for medication pricing as the administration balances multiple healthcare and economic priorities.