President Trump signed an executive order on Tuesday outlining a series of actions aimed at lowering drug prices, including helping to import drugs from Canada.
The policy was more modest than the proposal to lower the drug prices Trump offered in his first term.
And one of his new directives could raise drug prices. It calls for the Trump administration to work with Congress to change the 2022 legislation in a way that allows it to deactivate negotiation programs aimed at reducing Medicare spending on commonly used or expensive drugs.
Such changes could increase government costs as some drugs are likely to delay existing schedules to qualify for Medicare price cuts.
Depending on how it is structured, it could potentially increase Medicare drug spending billions of dollars compared to current law spending. The negotiation program was approved by a Democratic-controlled Congress and supported by former President Joseph R. Biden.
The executive order says changes to the Medicare price negotiation program should be “combined with other reforms to prevent an increase in overall costs for Medicare and its beneficiaries.”
Drug pricing experts said other directives in the executive order could save money for patients and government programs, except for proposals for Medicare negotiations. Neither action represents a major change that leads to significant savings.
One provision would lower the co-payments that some Medicare people face when receiving treatments like chemotherapy infusions at certain clinics and outpatient hospital sites. Others can access significantly discounted insulin and epinephrine injections to certain low-income individuals.
Tuesday's executive order was the most notable move Trump's second administration has ever made on drug pricing.
That follows Trump's decision to approach imposing tariffs on imported drugs that manufacturers are likely to give. This could force government programs, employers and patients to pay more for some medications, and exacerbate critical drug shortages.
Some directives, such as changes to the Medicare negotiation program, require Congressional approval. The pharmaceutical industry is vehemently opposed to some of the ideas of executive orders, while supporting others.
Trump has long complained that the US is paying far more for the same drugs than other wealthy countries. What is particularly lacking in the order is a report on the pricing policies of the most preferred countries, which he proposed in his first semester aimed at bringing us closer to what our peer countries pay. Like some of Trump's first-term drug prices policies, his most favoured national plan was suspended by federal courts. Last fall, Trump's presidential election returned a proposal.
This is a breakdown of some of the most notable parts of Trump's executive order.
Eliminate “pill penalty”
The order directs Health Secretary Robert F. Kennedy Jr. to work with Congress to address differences in how certain types of drugs are treated in Medicare negotiation programs.
Under the law, drugs and other drugs produced through the synthetic process are not eligible for price reductions until they are on the market for nine years. Drugs known as biology – created from living cells and often given as injections – are not eligible for 13 years.
Drugmakers have called the difference a “pill penalty” in suing the federal government over the program. They say they discourage patients from developing medication because they have less time to accumulate sales before prices are cut, taking away new treatments from them. They have been lobbying for tablets for 13 years, not nine, to be exempt from price cuts.
Lawmakers have introduced legislation that changes the law to treat two drugs equally.
The president's order does not specify a year for which each type of drug should be exempt from Medicare price reductions.
In a statement Tuesday, Alex Schriver, an official with PhRMA, the drug industry's leading lobbying group, said his organization will work with the Trump administration and Congress to “advance common-sense solutions that reduce costs and improve access for Americans.”
Biden officials oversaw the program's initial negotiations, bringing the price cuts that will take effect in 2026. This year, the Trump administration oversees 2027 low-cost negotiations for drugs sold as Ozempics in 2027 and drugs, including Wegovy.
In a fact sheet on Tuesday, the White House said it wanted to earn more savings for the government with its Medicare negotiation program than the Biden administration had last year. It's difficult if Congress cuts the time Medicare can get lower prices.
Drug imports from Canada
The executive order directs the Food and Drug Administration to improve the processes that provinces can apply to import low-cost drugs from Canada.
In his first term, Trump created a pathway that allowed states to pursue these imports. Under the Biden administration, the FDA approved one import program in Florida. Later last year, Florida had not yet begun importing medicines from Canada. The pharmaceutical industry is opposed to the idea because it cuts its profits.
If Trump imposes tariffs on drugs, importing drugs from Canada is unlikely to provide the same savings he has ever had.
Different joint sales at different clinics
The order calls for rules to level the fees doctors pay to administer drugs to patients across the environment.
Today, many medical practices owned by hospitals can charge Medicare higher fees than independent practices, even for the exact same services. Medicare beneficiaries are often responsible for the proportion of medical expenses, so higher costs for the visit are passed in the form of joint payments.
Efforts to broadly equalize such payments, which have been under bipartisan debate in Congress for many years, face opposition from hospitals that require higher payments. Laws passed during the Obama administration addressed some of these differences in payments.
We encourage cheaper counterfeit products
Trump has directed the FDA to develop recommendations to streamline approval for generics and biosimilars, which are low-cost mimics of biological drugs.
The first biosimilar was approved in 2015, and dozens have since been approved. There was widespread hope that biosimilars would replace patent-protected brand biology such as Fumira for conditions like arthritis. However, patients are slow to switch, and savings aren't as quickly as many people hoped.
Insulin for the poor
Trump revived executive orders from his first term instructing community health clinics, offering insulin and epinephrine injections at significantly discounted prices to certain low-income individuals, including uninsured individuals.
When Trump first proposed the idea in 2020, the clinic all. The Biden administration quickly frozen regulations and said it created too much administrative burden on clinics.
