On one of the last days of the Biden Administration, the Department of Health and Human Services (HHS) announced the second set of drugs selected for Medicare price negotiation pursuant to provisions of the Inflation Reduction Act (IRA), signed into law in 2022. Just a few days later, on his first day in office, President Trump rescinded an unrelated Biden Executive Order addressing the cost of prescription drugs.
Inflation Reduction Act – Second Batch of Drugs for Medicare Negotiation Announced
On January 17, 2025, HHS announced the selection of 15 additional drugs covered under Medicare for price negotiations, effective 2027. This list includes drugs used to control blood sugar in individuals with type 2 diabetes, reduce the risk of cardiac events and promote weight loss. Under the law, the new Trump Administration is tasked with carrying out negotiations with drug manufacturers to continue achieve savings for Medicare and Medicare beneficiaries.
According to a KFF publication titled “KFF Health Tracking Poll: Public Weighs Health Care Spending and Other Priorities for Incoming Administration” (Jan. 17, 2025), drug price negotiation is broadly popular:
Expanding the number of prescription drugs that the federal government negotiates the Medicare price on is also ranked as a “top priority” by a majority of the public including two-thirds of Democrats, 54% of independents, 48% of Republicans and three-fourths of people who are currently enrolled in Medicare.
The HHS Press Release announcing the new batch of drugs to be negotiated also cited to a recent report about projected savings for Medicare beneficiaries due to other provisions of the IRA:
the Office of the Assistant Secretary for Planning and Evaluation (ASPE) also released new data detailing the projected impact of the new out-of-pocket cap on covered prescription drugs for Medicare Part D enrollees. About 11 million people with Medicare Part D are expected to hit the $2,000 cap in 2025 and will no longer have out-of-pocket drug costs after reaching the cap. These 11 million Medicare Part D enrollees are projected to save a combined $7.2 billion, or about $600 per enrollee. Among these enrollees, those who do not receive financial assistance for their prescription drug costs are expected to save even more – an average $1,100 per enrollee in 2025.
President Trump Rescinds Biden Executive Order re: Prescription Drugs
On the first day of his new administration, President Donald Trump signed numerous Executive Orders (EOs), including one titled “Initial Recissions of Harmful Executive Orders and Actions” (Jan. 20, 2025) that aims to address “deeply unpopular, inflationary, illegal, and radical practices” from the previous administration. Among the Biden Administration policies rescinded is Executive Order 14087 of October 14, 2022 (Lowering Prescription Drug Costs for Americans).
According to a Fierce Healthcare article describing the rescinded EO (Jan. 21, 2025), “[i]n February 2023, Biden launched three models to lower the price of drugs. They are yet to begin but were implemented to lower the cost of cell and gene therapies, cap certain generic drugs at a $2 monthly out-of-pocket price and accelerate Food and Drug Administration approval for drugs that address unmet medical needs.”
In a Newsweek post about this rescinded EO titled “Donald Trump’s Executive Order Explained” (Jan. 21, 2025), the potential impacts are outlined:
The potential impact of rescinding executive order 14087 is as follows:
- Halted development of cost-reduction models: The directive for the Department of Health and Human Services to develop and test new models aimed at lowering drug costs through the Center for Medicare and Medicaid Innovation has been withdrawn. This move could slow or halt progress on initiatives that were designed to make prescription medications more affordable.
- Potential increase in out-of-pocket expenses: Without the implementation of new models focused on reducing costs, Medicare and Medicaid beneficiaries might continue to face high out-of-pocket expenses for prescription drugs, possibly affecting access to certain medications.
- Uncertainty in future drug pricing policies: The rescission creates uncertainty regarding the federal government’s approach to addressing prescription drug costs, which could leave beneficiaries unsure about future measures to control or reduce expenses.
Conclusion
The Inflation Reduction Act is the law of the land and has already achieved significant savings for Medicare beneficiaries and the Medicare program. The IRA and other efforts to further reduce drug costs should be defended, not diminished.
January 23, 2025 – D. Lipschutz