On April 15, 2025, President Trump issued the executive order “Lowering Drug Prices by Once Again Putting Americans First,” aimed at lowering the prices of prescription drugs and biologics, encouraging competition in the drug industry and making essential treatments more widely available. The order summarizes a policy aim to ensure that “[f]ederal health care programs, intellectual property protections, and safety regulations are optimized to provide access to prescription drugs at lower costs to American patients and taxpayers.”
Many of the order’s provisions are more modest than the broad-sweeping reforms President Trump proposed during his first term. How these provisions will be implemented, particularly those that require congressional action, is unclear, as is what the overall cost impacts of the order would be, even if fully implemented. Key provisions of the order relevant to the life sciences industry include:
- Changes to Medicare’s drug price negotiation program. The order seeks to revise the Inflation Reduction Act’s Medicare Drug Price Negotiation Program (the Program) by directing the secretary of the Department of Health and Human Services (HHS) to, within 60 days of the order, propose and seek comment on guidance for the Program, with the goals of increasing transparency, prioritizing high-cost medications and expanding the 22% in savings achieved by the Biden administration in the Program’s first year. If implemented, these changes would delay price negotiations for small-molecule prescription (SMP) drugs under the Program by four years.
The order also directs the secretary to work with Congress to amend the Program to treat price negotiations for SMP drugs and large-molecule biological products consistently. This approach contrasts with the Program’s current rules, which expose SMP drugs to price negotiations four years sooner than biologics — referred to colloquially as the “pill penalty” by those critical of the current difference in treatment. The order asserts that this change is needed to incentivize development of SMP drugs, which tend to be less costly and more widely used compared to biologics. - Directions for FDA to accelerate lower-cost competitor products. Within 180 days of the order, the commissioner of the Food and Drug Administration (FDA) will issue a report with recommendations for (i) accelerating the approval of generic drugs, biosimilars, combination products and second-in-class brand name medications; and (ii) improving the process for reclassifying prescription drugs as over-the-counter medications, including proposals to identify prescription drugs for reclassification.
- Cost proposals for drugs covered by Medicare and Medicaid. The order contains several provisions directing the HHS secretary and other government officials to make various proposals relating to drug reimbursement under Medicare, including to:
- Stabilize and reduce Medicare Part D premiums.
- Test a payment model to obtain better value for high-cost prescription drugs and biologics covered by Medicare.
- Align Medicare payments with the hospital acquisition cost for covered outpatient drugs used in hospital outpatient departments.
- Discourage incentives to administer drugs in hospital outpatient departments in lieu of physician office settings.
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With respect to Medicaid, the order calls for recommendations to:
- Ensure that pharmaceutical manufacturers pay accurate Medicaid drug rebates.
- Promote innovation in Medicaid drug payment methodologies.
- Link drug payments to value obtained.
- Support states in managing drug spending.
- Discounted access to insulin and injectable epinephrine for low-income patients. The order directs the HHS secretary to, within 90 days, take steps to condition future Public Health Service Act grants on health centers making insulin and injectable epinephrine available to certain low-income individuals at or below the 340B Prescription Drug Program discounted price.
- Encouraging states to import drugs. The order directs the FDA commissioner to, within 90 days, streamline and improve the Importation Program under Section 804 of the Food, Drug, and Cosmetic Act that allows states to obtain FDA approval to import certain drugs from Canada, with the goal of facilitating approvals.
- Scrutiny of pharmacy benefit managers and other pharmaceutical industry middlemen. Scrutiny of pharmacy benefit managers and other pharmaceutical industry middlemen. The order directs the labor secretary to, within 180 days, propose enhancements for employer health plan fiduciary transparency of direct and indirect compensation that pharmacy benefit managers receive. Another provision requires the secretary and other officials to recommend, within 90 days, ways to promote a “more competitive efficient, transparent, and resilient pharmaceutical value chain that delivers lower drug prices for Americans.”
- Reducing anticompetitive behavior by pharmaceutical manufacturers. The order directs the HHS secretary to (i) convene public listening sessions within 180 days — with participation by the Department of Justice, the Department of Commerce and the Federal Trade Commission; and (ii) issue a report with recommendations to “reduce anti-competitive behavior” from prescription drug manufacturers.
We will continue to monitor and provide updates on President Trump’s drug pricing proposals as they move forward.
See the Executive Briefing publication
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