President Trump’s Plan to Reduce Medication Costs

President Donald Trump has announced that he will sign an executive order on Monday that could bring down the costs of some medications. This move is a revival of a failed effort from his first term, an idea he has promoted since even before becoming president.

The order Trump is promising will direct the Department of Health and Human Services to tie what Medicare pays for medications administered in a doctor’s office to the lowest price paid by other countries.

“I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World,” the president posted Sunday on his social media site, pledging to sign the order on Monday morning at the White House.

What the Order Entails

The proposal would likely only impact certain drugs covered by Medicare and given in an office — think infusions that treat cancer, and other injectables. But it could potentially bring significant savings to the government.

Medicare provides health insurance for roughly 70 million older Americans.

Complaints about U.S. drug prices being notoriously high, even when compared with other large and wealthy countries, have long drawn the ire of both parties, but a lasting fix has never cleared Congress.

How it Works

Under the planned order, the federal government would tie what it pays pharmaceutical companies for those drugs to the price paid by a group of other, economically advanced countries — the so-called “most favored nation” approach.

The proposal will face fierce opposition from the pharmaceutical industry.

It was a rule that Trump tried to adopt during his first term, but could never get through. He signed a similar executive order in the final weeks of his presidency, but a court order later blocked the rule from going into effect under the Biden administration.

Pharmaceutical Industry’s Concerns

The pharmaceutical industry argued that Trump’s 2020 attempt would give foreign governments the “upper hand” in deciding the value of medicines in the U.S.

The industry has long argued that forcing lower prices will hurt profits, and ultimately affect innovation and its efforts to develop new medicines.

Only drugs on Medicare Part B — the insurance for doctor’s office visits — are likely to be covered under the plan.

Impact on Medicare Beneficiaries

Medicare beneficiaries are responsible for picking up some of the costs to get those medications during doctor’s visits, and for traditional Medicare enrollees, there is no annual out-of-pocket cap on what they pay.

A report by the Trump administration during its first term found that the U.S. spends twice as much as some other countries in covering those drugs.

Medicare Part B drug spending topped $33 billion in 2021.

Conclusion

Trump’s post formally previewing the action came after he teased a “very big announcement” last week.

He came into his first term accusing pharmaceutical companies of “getting away with murder” and complaining that other countries whose governments set drug prices were taking advantage of Americans.

On Sunday, Trump took aim at the industry again, writing that the “Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the ‘suckers’ of America, ALONE.”

Referring to drug companies’ powerful lobbying efforts, he said that campaign contributions “can do wonders, but not with me, and not with the Republican Party.”

“We are going to do the right thing,” he wrote.

Frequently Asked Questions

Q: What is the purpose of the executive order?

A: The executive order aims to reduce the costs of certain medications by tying what Medicare pays for medications administered in a doctor’s office to the lowest price paid by other countries.

Q: Which drugs will be affected by the order?

A: Only drugs on Medicare Part B — the insurance for doctor’s office visits — are likely to be covered under the plan.

Q: How will the order impact Medicare beneficiaries?

A: Medicare beneficiaries may see a reduction in their out-of-pocket costs for certain medications, but the order may not affect all prescription drugs.

Q: Why is the pharmaceutical industry opposing the order?

A: The pharmaceutical industry argues that forcing lower prices will hurt profits and ultimately affect innovation and its efforts to develop new medicines.