President Donald J. Trump today signed an Executive Order titled “Lowering Drug Prices by Once Again Putting Americans First,” launching a multi-pronged effort intended to reduce prescription drug costs.
The order directs federal agencies to revisit, revise, and implement policies aimed at increasing competition, transparency, and negotiation power within the pharmaceutical market, while heavily criticizing measures enacted during the previous administration.
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The executive order frames the initiative as a return to and expansion of policies from Mr. Trump’s first term, which the document states were delivering “real savings for American patients” before being allegedly undone by the Biden administration.
It specifically targets the Inflation Reduction Act (IRA) passed under President Biden, labeling its Medicare Prescription Drug Negotiation Program “administratively complex and expensive” and claiming it has produced lower savings than projected while leading to higher Medicare Part D premiums.
A key criticism leveled in the order is against the IRA’s so-called “pill penalty,” which imposes price controls on traditional small-molecule drugs sooner than on biologic products. The order argues this “distorts innovation” away from potentially cheaper, widely used medications.
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The new directives outlined in the executive order task various agencies, primarily the Department of Health and Human Services (HHS), with specific actions and deadlines:
- Revising IRA Implementation: HHS must issue guidance within 60 days to improve the transparency and prioritization of the Medicare Drug Price Negotiation Program and minimize negative impacts on innovation. The administration also plans to work with Congress to eliminate the “pill penalty.”
- Stabilizing Medicare Part D: Recommendations are due within 180 days on stabilizing and reducing Part D premiums.
- New Medicare Payment Models: Within one year, HHS is directed to develop and test a payment model to secure better value for high-cost drugs, including those not subject to the current negotiation program.
- Accurate Medicare Pricing: HHS must, within 180 days, plan a survey to determine actual hospital acquisition costs for outpatient drugs to potentially adjust Medicare payments.
- Medicaid Reforms: The Office of Management and Budget (OMB) and policy advisors are tasked, within 180 days, with recommending ways to ensure accurate Medicaid rebates, promote value-based payments, and help states manage drug spending.
- Affordable Insulin and Epinephrine: HHS must take action within 90 days to condition future health center grants on those centers making insulin and injectable epinephrine available at or near their discounted 340B price to low-income individuals facing high costs or lacking insurance.
- Scrutinizing Middlemen: Recommendations are mandated within 90 days on how to promote a more competitive and transparent pharmaceutical supply chain, likely targeting Pharmacy Benefit Managers (PBMs). HHS is also directed within 180 days to propose regulations improving employer health plan transparency into PBM compensation.
- Accelerating Competition: The Food and Drug Administration (FDA) must report within 180 days on ways to speed up approvals for generics, biosimilars, and other competitors, and improve the process for switching drugs to over-the-counter status.
- Boosting Drug Importation: The FDA is instructed within 90 days to streamline the Section 804 importation program to make it easier for states to import drugs safely.
- Addressing Site-of-Care Costs: HHS will evaluate potential regulations within 180 days to ensure Medicare isn’t incentivizing shifts from lower-cost physician offices to more expensive hospital outpatient settings for drug administration.
- Combating Anti-Competitive Behavior: HHS, in coordination with the Department of Justice, Department of Commerce, and Federal Trade Commission, will hold listening sessions and report within 180 days on recommendations to reduce anti-competitive practices by drug manufacturers.
The executive order emphasizes a policy of optimizing federal programs and regulations to lower drug costs for American patients and taxpayers, positioning the actions as fulfilling a promise to put “Americans first” and make “America healthy again.”
The order includes standard provisions noting it must be implemented consistent with applicable law and available funding, and that it does not create any privately enforceable rights.
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