A new executive order by Donald Trump pushes for changes in Medicare drug price negotiations, echoing pharmaceutical companies' demands to delay price cuts for widely used medications
US President Donald Trump has signed a new executive order aimed at overhauling parts of the Medicare drug pricing programme, a move that may reshape the landscape of pharmaceutical costs in the country. The order instructs the Department of Health and Human Services (HHS) to work with Congress to revise the timeline under which drugs become eligible for government price negotiations.
According to a Reuters report, the pharmaceutical industry has long pushed for a change in these rules. Currently, drugs taken in pill or capsule form become eligible for Medicare price negotiation after nine years on the market. Biotech drugs—often more complex and administered differently—are eligible only after 13 years. Trump’s proposal would align the timelines, effectively giving small-molecule drugs four more years of market exclusivity before government negotiations could begin.
This change cannot be made through executive action alone. It requires congressional approval, which is why the order calls on HHS Secretary Robert F Kennedy Jr to work with lawmakers on amending the existing law.
The executive order is part of a broader strategy to cut healthcare costs. It follows a recent move by the Trump administration to launch a national security review of the pharmaceutical sector—a possible first step toward introducing tariffs specific to the industry.
The Biden administration had introduced direct drug price negotiations under the Inflation Reduction Act, arguing it would lower costs for the roughly 66 million Americans covered under Medicare. Trump’s latest order comes as his team prepares to negotiate prices for the second batch of 15 drugs, including major treatments like Ozempic and Wegovy (Novo Nordisk), and cancer therapies such as Ibrance and Xtandi (Pfizer).
Drugmakers have raised concerns that early price negotiations could reduce investment in research and development. They argue that a longer period of exclusivity is necessary to recover costs and fund future innovation.
White House officials claim that changing the eligibility timeline could generate more savings than the first round of Biden-era negotiations, which reportedly led to price cuts of up to 79% on the first 10 drugs selected. However, they have not shared the details behind these savings estimates.
In addition to addressing negotiation timelines, Trump’s order also targets payment parity across healthcare settings. The plan seeks to make Medicare payments for drugs more consistent with what hospitals pay, which is often about 35 per cent less. It also pushes for standardizing what patients pay across different care locations, a shift known as "site-neutral" payment.
Another focus of the order is drug importation. The FDA has been instructed to encourage more state-level applications to import lower-cost drugs from countries like Canada. So far, only Florida has received approval. Trump introduced this concept during his first term, and this new order aims to expand it.
The FDA is also being directed to speed up the approval of cheaper generic and biosimilar drugs, offering more competition to existing brand-name treatments.
