Trump Signs Order Aimed at Lowering Prescription Drug Prices

President Donald Trump wants Congress to change a policy that gives certain drugs longer protection from drug price negotiations in Medicare, a fix that could address one of the drug industry’s top complaints with the Biden-era law.

Trump directed his health secretary to work with lawmakers to end the differential treatment for small molecule drugs, typically pills, that face Medicare price negotiations sooner than more complex biologic medications.

The directive came in an executive order Trump signed at the White House Tuesday. The order was light on specifics and included a grab-bag of other health policy goals.

A White House official, who detailed the order before its public release on the condition of anonymity, said the changes to drug price negotiations were aimed at improving on the policies enacted by the Biden administration over Republican opposition, and that they wouldn’t increase Medicare spending.

A change to the so-called pill penalty has been on drug lobbyists’ wish lists for years, but would require Congress to adjust the law. The Inflation Reduction Act makes small molecule drugs face Medicare price negotiations after 7 years on the market, while biologics get 11 years of protection. Companies say the disparity warps incentives for drug development.

In January, Eli Lilly & Co. Chief Executive Officer Dave Ricks told Bloomberg that he and other drugmakers would ask Trump to “fix” certain IRA provisions before negotiating the price of more drugs.

The order also directs the Food and Drug Administration to streamline approvals for generic drugs and biosimilars, or copycat versions of complex biologic medications. It also instructs the FDA to work with states to expand imports of drugs from Canada, the official said.

The drug importation program was a policy Trump advanced during his first term. The order also aims to revive some other elements of his first-term health agenda, the official said, including discounts on insulin and epinephrine for low-income people.

The White House’s push to lower drug prices comes as experts warn that Americans could end up paying more for medicines as a result of Trump’s sweeping tariffs. Though global tariffs have been partly paused for 90 days, the Trump administration has opened a probe into pharmaceutical imports to eventually impose levies on the sector.

The order also aims to align Medicare’s payment rates for drugs with hospitals’ cost to acquire them.

The administration will seek to align payment rates across settings, a policy known as site-neutral payments that Congress has been considering for years. That would eliminate the difference between what Medicare pays to hospital-owned outpatient facilities and independent medical offices, a change the hospital industry has fought. It’s unclear how much authority the administration has to make that change without congressional action.

--With assistance from Skylar Woodhouse and Hadriana Lowenkron.

To contact the reporters on this story:
John Tozzi in New York at jtozzi2@bloomberg.net;
Madison Muller in New York at mmuller84@bloomberg.net;
Stephanie Lai in Washington at slai186@bloomberg.net

To contact the editors responsible for this story:
Cynthia Koons at ckoons@bloomberg.net

Justin Sink, Meghashyam Mali

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