Donald Trump on Tuesday directed his health department to work with Congress on a revamp of laws that would allow Medicare to negotiate prices for prescription drugs, and tried to introduce the changes the pharmaceutical industry has been lobbying for.
Drugmakers are primarily pills and pushing for the four years of small molecule drugs, which account for most drugs, to delay the timelines for which drugs are subject to price negotiations.
This coincides with a 13-year wait until more complex biotech drugs are subject to Medicare price negotiations.
The broad executive order signed by Trump aims to cut healthcare costs. It comes a day after the Trump administration established its national security report in the pharmaceutical industry, the predecessor of sector-specific tariffs.
Medicare's ability to directly negotiate prices for selected drugs was part of President Joe Biden's Inflation Reduction Act. Medicare covers 66 million Americans, primarily 65 years old and over.
Drugmakers have complained about the terms of Medicare's negotiating power, saying that it would curb innovation. In particular, the industry is opposed to the time frame of eligibility for most drug negotiations.
If drugs are not competitive, the law now allows the government to negotiate the price of complex biological or biotechnology drugs in the market after 13 years, but nine years later for drugs taken as pills and capsules.
Trump cannot implement changes through executive orders as the negotiation process is outlined in the law, but his order directs Department of Health and Human Services Secretary Robert F. Kennedy JR to cooperate with the change with Congress.
Other proposed changes to the negotiation process will bring more savings than what was achieved in the first round under the Biden administration, White House officials told reporters to sign and sign.
The Biden administration negotiated a price cut of up to 79% for the first group of 10 drugs considered the most expensive for the Medicare program.
The Trump administration will negotiate the price of a second group of 15 drugs, including Novo Nordisk's blockbuster diabetes and weight loss treatment.
Trump's order also calls for drug Medicare payments to be 35% lower than hospital Medicare payments, and will require standardising patient payment rates across locations, preventing people from being charged different rates depending on where they receive care.
Trump has directed the Food and Drug Administration to encourage more applications from states for the drug import program.
So far, they have obtained FDA permits to import drugs directly from Canada, despite several more states being applied. It also directs the FDA to streamline approval for cheaper generic and biosimilar versions of branded drugs.
