Trump backs Pharma, supports change to IRA’s ‘pill penalty’
TL/DR –
President Donald Trump issued an executive order proposing amendments to the Inflation Reduction Act (IRA) that could delay Medicare drug pricing negotiations for small molecule prescription drugs by approximately four years. This move, largely seen as favorable to drugmakers, could potentially impact the access of critical drugs to patients as it would delay the price negotiation for some of these drugs. Trump’s order also asks the Department of Health and Human Services to work with Congress on approved changes, directs the Office of Management and Budget to develop recommendations to reduce premiums under Medicare Part D, and orders the Food and Drug Administration to streamline the drug importation program for states.
Trump Administration Adjusts Inflation Reduction Act in Favor of Drugmakers
The Trump administration recently issued an executive order proposing amendments to the Inflation Reduction Act (IRA) that are favorable to drugmakers.
This executive order aims to modify the current provisions regarding small molecule prescription drugs to align them with biological products under the existing Medicare Drug Price Negotiation Program as per the IRA.
This negotiation program permits Medicare to directly negotiate drug prices with manufacturers, providing cost-efficient drugs to over 66 million Americans covered by Medicare.
Though this move is applauded by drugmakers, it may delay access to essential drugs for patients due to extended price negotiation periods. Last year, several key drugs like Farxiga, Januvia, and Imbruvica were included in this list.
In the current scenario, Medicare can negotiate prices for complex biologic drugs without competition after 13 years on the market. For pill and capsule forms, the negotiation can start after nine years in the market.
Drugmakers have argued that these timelines discourage them from developing new drugs due to the impending price cuts. The proposed amendment, however, would delay Medicare drug pricing negotiations by approximately four years for small molecule prescription drugs.
The implementation of these changes can’t be done solely via executive order and would require the involvement of the Department of Health and Human Services (HHS) and Congress.
HHS Secretary Robert F. Kennedy Jr. will lead the collaboration with Capitol Hill to implement these changes. The revised Medicare prices for these drugs are set to be effective from January 1st, 2026, and could save beneficiaries an estimated $1.5 billion.
Trump’s executive order also directs the Office of Management and Budget (OMB) to develop recommendations to stabilize and reduce premiums under Medicare Part D, lowering patient out-of-pocket costs. Other orders aim to reduce overall prescription drug costs and balance payments within the Medicare program.
The order also calls on the Food and Drug Administration to simplify the drug importation program for states, allowing states to directly import drugs. Currently, only Florida has permission to directly import drugs from Canada.
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