Yesterday, President Trump signed an Executive Order titled “Lowering Drug Prices By Once Again Putting Americans First” (Drug Pricing EO). The White House also released a Fact Sheet related to the Drug Pricing EO.
The Drug Pricing EO is wide-ranging, focusing on (among other issues) the following:
- Medicare programs including Part B, Part D, and the Medicare Drug Price Negotiation Program;
- Medicaid drug rebates;
- state importation of drugs from Canada under the FDA’s Importation Program;
- Federally Qualified Health Centers (FQHCs);
- drugs delivered in the hospital outpatient department (HOPD) setting; and
- pharmacy benefit manager (PBM) practices.
To carry out its stated goals, the Drug Pricing EO includes directions to HHS, FDA, and DOJ, as well as the Department of Labor (Labor), the Department of Commerce (Commerce), the White House Domestic Policy Council (DPC), the White House National Economic Council (NEC), and the White House Office of Management and Budget (OMB).
Of particular note, the Drug Pricing EO includes an aggressive timeline for the Trump Administration to propose updated guidance on the Medicare Drug Price Negotiation Program and directs HHS to “work with Congress to modify” the Program “to align the treatment of small molecule prescription drugs with that of biological products” (i.e., to address the so-called “pill penalty,” which makes pills eligible for price negotiations earlier than biologics). The EO also suggests that the Trump Administration will pursue cuts to hospital payments for Part B drugs and attempt to make changes to the 340B Drug Pricing Program and the Medicaid drug rebate program.
Below is a timeline of the specific actions required by the Drug Pricing EO:
Within 60 Days (mid-June)
- HHS to “propose and seek comment on guidance for the Medicare Drug Price Negotiation Program for initial price applicability year 2028 and manufacturer effectuation of maximum fair price under such program in 2026, 2027, and 2028.”
Within 90 Days (mid-July)
- OMB, DPC, and NEC, in coordination with HHS, to “provide recommendations to the President on how best to ensure that manufacturers pay accurate Medicaid drug rebates . . . promote innovation in Medicaid drug payment methodologies, link payments for drugs to the value obtained, and support States in managing drug spending.”
- HHS to require FQHCs “to make insulin and injectable epinephrine available at or below the discounted price paid by the [FQHC] under the 340B Prescription Drug Program (plus a minimal administration fee)” to individuals who have (i) a high cost-sharing requirement for either insulin or injectable epinephrine, (ii) a high unmet deductible, or (iii) no health insurance.
- DPC, in coordination with HHS, OMB, and NEC, to “provide recommendations to the President on how best to promote a more competitive, efficient, transparent, and resilient pharmaceutical value chain that delivers lower drug prices for Americans.”
- FDA to “take steps to streamline and improve the Importation Program . . . to make it easier for States to obtain approval without sacrificing safety or quality.”
Within 180 Days (mid-October)
- DPC to “provide recommendations to the President on how best to stabilize and reduce Medicare Part D premiums.”
- HHS to develop and publish “a plan to conduct a survey” of the acquisition costs for hospital outpatient drugs covered under Medicare Part B at HOPDs and to subsequently “consider and propose any appropriate adjustments that would align Medicare payment with the cost of acquisition.”
- FDA to issue a report providing recommendations to (i) “accelerate approval of generics, biosimilars, combination products, and second-in-class brand name medications” and (ii) “improve the process through which prescription drugs can be reclassified as [OTC] medications, including recommendations to optimally identify prescription drugs that can be safely provided to patients over the counter.”
- HHS to propose regulations “to ensure that payment within the Medicare program is not encouraging a shift in drug administration volume away from less costly physician office settings to more expensive HOPDs.”
- Labor to propose regulations under ERISA “to improve employer health plan fiduciary transparency into the direct and indirect compensation received by [PBMs].”
- HHS to conduct public listening sessions with DOJ, Commerce, and the FTC, and issue a report with recommendations “to reduce anti-competitive behavior from pharmaceutical manufacturers.”
Within 1 Year
HHS to create a Center for Medicare & Medicaid Innovation (CMMI) payment model “to improve the ability of the Medicare program to obtain better value for high-cost prescription drugs and biological products covered by Medicare.”
