Early moves by the president raise questions about what direction his second-term policy on drug costs will take.
Amid a flurry of executive actions on his first day back in office, President Donald Trump gave the first official indications of his administration’s approach to health care by scrapping existing orders aimed at expanding health coverage under the Affordable Care Act and strengthening Medicaid.
Also among the more notable orders reversed was one from President Joe Biden in 2022 that sought to boost efforts to lower prescription drug costs for people covered by Medicare and Medicaid.
High prescription costs continue to be a pressing concern for many. In 2021, Americans paid an average of $1,432 for prescription drugs – higher than other peer nations, according to the Center for American Progress. Polling last year from the nonprofit organization KFF found that 55% of U.S. adults said they were either “very worried” or “somewhat worried” about their ability to afford prescriptions, with about 3 in 10 previously reporting they had not taken prescribed medicine due to costs.
Trump’s move ultimately raises questions as to what direction his policy on drug costs will take. It’s unclear whether his rescission of Biden’s executive order is a sign his administration will pursue different strategies to lower costs, or if it marks a bigger policy shift on an issue Trump took actions to address during his first term.
What Has Trump Done So Far on Drug Prices?
Rescinding Biden’s order calls into question the future of three projects that resulted from the order and were promulgated by the federal Center for Medicare and Medicaid Innovation.
- One of those models would seek to cap the costs of some generic drugs for chronic conditions at $2 under Medicare Part D plans.A recently released federal report estimated the model could reduce out-of-pocket spending across relevant enrollees by some $2 billion if in effect in 2025.
- Another experimental program is aimed at providing greater access to cell and gene therapy treatments for Medicaid beneficiaries with rare and severe diseases. State Medicaid programs could sign on to an agreement negotiated by the Centers for Medicare & Medicaid Services and participating manufacturers, with pricing tied to health outcomes.
- A third project aims for lower Medicare payments for drugs given early approval by the Food and Drug Administration, with a goal of encouraging drug manufacturers to speed up completion of confirmatory trials.
“The idea behind that was why pay full price for a drug that does not have full approval, and (if) we don’t have full confidence that the drug works,” says Dr. Mariana Socal, an associate professor in the Department of Health Policy and Management at the Johns Hopkins Bloomberg School of Public Health.
The programs reportedly were not yet fully implemented. CMS referred a request for information by U.S. News to the Department of Health and Human Services, which did not respond.
“These three programs, with this repeal, may never come to fruition,” Socal says.
If the Trump administration does opt to permanently forgo the CMS models, she says, the move would be a significant step back. “These programs were already in a rollout phase, so what we will not see in the absence of these programs are the benefits that they could bring,” Socal says.
Juliette Cubanski, deputy director of the Program on Medicare Policy for KFF, says it’s unlikely CMS would move forward with the projects. “It really does seem like a surprising turn for a president who made lowering prescription drug costs a real cornerstone of his policy agenda in his first term in office,” she says.
Cubanski adds that implementing models that lower drug costs for a program the size of Medicare would have a significant impact on the nation’s overall health care spending. Medicare and Medicaid combined accounted for around 40% of total U.S. health expenditures in 2023, according to CMS.
“When Medicare tries to move the needle, that has a potentially more significant impact on spending overall,” Cubanski says.
What Has Trump Done Before on Drug Prices?
Though Trump has yet to provide details on his prescription drug pricing plans, he has in the past supported policies and initiatives aimed at reducing costs.
In 2020, Trump established a temporary model through which participating Medicare prescription drug plans covered insulin products at no more than $35 a month. That model was later significantly expanded under the Biden administration through the Inflation Reduction Act.
Also during his first term, Trump moved to establish a “Most Favored Nation” model for drug pricing that would set payment for Medicare Part B drugs at prices comparable to those paid by other countries. That policy was blocked in court and ultimately rescinded by the Biden administration. During the campaign, Trump reversed course and indicated he did not plan to revive the policy if reelected.
Another area to watch: whether Trump will try to build on an effort to allow states to import drugs from Canada, a pathway his administration cleared during his first term but one that as of late last year hadn’t seen success.
“A lot of ideas that the Trump administration developed and tried to implement in the first term did not actually get implemented,” Cubanski says.
During his second term, Trump is likely to seek pharmacy benefit manager reform, something that has been pursued by members of both parties. Comments from the CEO of drugmaker Eli Lilly also indicate Trump may seek to force other countries to pay higher prices for prescription drugs in order to lower costs in the U.S.
Cubanski is beyond skeptical that such an approach would be successful.
“In other countries, I think, they are more comfortable making the tradeoff between having immediate access to the latest and greatest medications, and paying the price that manufacturers want to charge,” she says. “So, there is more of a negotiation and a greater insistence that manufacturers show the value of their product relative to other products on the market.”
Will Trump Continue Medicare’s Drug Price Negotiations?
Trump’s moves thus far also raise questions about the fate of drug cost-related provisions included in the Inflation Reduction Act. In addition to capping insulin costs, the law limits out-of-pocket spending to $2,000 for drugs covered under Medicare Part D and requires drug companies to pay rebates if prices rise faster than inflation.
The IRA also allowed the federal government to negotiate with companies on prices for certain drugs – an approach Trump once championed but retreated from in office during his first term. A first round of negotiations led to lower prices for 10 drugs that will take effect in 2026 and would have saved an estimated $6 billion costs had they been in place in 2023, according to the Biden administration.
The latest slate of drugs tapped for negotiations encompasses the blockbuster drug Ozempic, which is covered by Medicare for diabetes treatment. And while a full repeal of such initiatives would require Congress, Cubanski says, the Trump administration could take a number of steps to hinder their implementation.
What they’ll do remains to be seen.
“I think pulling back on those efforts will be substantially more consequential both in terms of Medicare spending and what people with Medicare pay for prescription drugs,” Cubanski says.
