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The Trump administration made a decidedly pro-industry statement on the Inflation Reduction Act (IRA). 

In an executive order issued Tuesday, President Donald Trump outlined changes to the Biden administration’s landmark law that were largely seen as favorable to drugmakers. 

In the order, Trump seeks to amend current provisions of small molecule prescription drugs so that it is in line with that of biological products under the current Medicare Drug Price Negotiation Program of the IRA.

The Medicare Drug Price Negotiation Program allows Medicare to negotiate drug prices directly with drugmakers. The program provides lower cost drugs to the over 66 million Americans that Medicare covers. 

In 2024, the program negotiated the price of 10 drugs. This year, there are 15 drugs up for negotiation, including the popular weight loss drug Ozempic from Novo Nordisk. 

Drugmakers have opposed Medicare negotiations, specifically focusing on the timeline of negotiation eligibility timeframe of drugs and also taken issue with the so-called ‘pill penalty.’

Under current law, Medicare is allowed to negotiate prices for complex biologic drugs that have no competition after they have been on the market for 13 years. 

If the drugs come in the form of pills and capsules, Medicare can start negotiating prices after the drug has been on the market for nine years. 

Drugmakers have previously argued that these timelines discourage them from developing new drugs because they have less time to generate sales before the price cuts hit. 

The proposed amendment from the White House would delay Medicare drug pricing negotiations by approximately four years for small molecule prescription drugs, which is what drugmakers have been lobbying for. 

However, Trump himself cannot implement this change through the executive order. 

Instead, he has asked the Department of Health and Human Services, which oversees Medicare to work with Congress on approved changes to the program. 

HHS Secretary Robert F. Kennedy Jr. will take the lead on working with Capitol Hill to implement the changes. 

While this is considered a positive development for drugmakers, it could potentially impact the access of critical drugs to patients as it would delay the price negotiation for some of these drugs. 

Last year’s list included diabetes drugs Farxiga, Januvia, and Jardiance, heart failure drugs Entresto and Farxiga and blood cancer drug Imbruvica. 

The negotiated Medicare prices for these drugs will go into effect on January 1, 2026 and are projected to save Medicare beneficiaries $1.5 billion. 

This year’s list includes a number of cancer drugs like Pfizer’s Ibrance, Astellas/Pfizer’s Xtandi and AstraZeneca’s Calquence. 

Trump’s order also directs the Office of Management and Budget (OMB) to develop recommendations to stabilize and reduce premiums under Medicare Part D in an attempt to lower the out-of-pocket costs for patients. 

Other orders from the White House outline efforts aiming to reduce the general cost of prescription drugs. 

One of the orders seeks to ensure that payment within the Medicare program creates a balance between higher and lower volume physician offices and hospital outpatient departments. 

Trump also ordered the Food and Drug Administration to streamline the drug importation program for states, which allows individual states to directly import drugs. 

Several states have applied for waivers through the program, but currently, only Florida has been given authorization to directly import drugs from Canada.