Drug pricing reform remains a critical issue in the United States, with President Donald J. Trump’s latest Executive Order aiming to address soaring prescription drug costs. Signed on April 15, 2025, the order introduces significant changes to Medicare pricing, supports low-income patients, and proposes a ‘Most Favored Nation’ (MFN) policy. In this article, I explore the key components of the order, its potential impact on healthcare systems, and offer insights for decision-makers in healthcare, policy, and market access.

Context and Background

The US spends over $400 billion annually on prescription drugs, with out-of-pocket costs reaching $98 billion in 2024. Previous efforts, such as the Inflation Reduction Act under the Biden administration, have fallen short of expected savings. Trump’s new order seeks to overhaul drug pricing through multiple strategies. Historically, similar initiatives during Trump’s first term faced legal hurdles and political resistance. Despite these challenges, the renewed push in 2025 reflects a strong commitment to tackling high drug prices.

Analysis and Insights

Core Components of the Executive Order

• The order enhances the Medicare Drug Pricing Negotiation Program, aiming for savings beyond the 22% achieved previously.
• It aligns Medicare payments with hospital acquisition costs, which could reduce costs by up to 35%.
• Standardised payments for drugs like cancer treatments might lower prices by as much as 60%.
• Low-income and uninsured individuals will benefit from reduced prices on insulin and injectable epinephrine, to as low as $0.03 and $15, respectively.
• State-level cost reductions are supported through drug importation programs and better deals on medications like those for sickle-cell in Medicaid.
• The MFN policy aims to tie US drug prices to the lowest prices paid by other high-income nations, potentially cutting costs by 30% to 80%.

Transparency and Competition

• The order prioritises increasing access to generics and biosimilars, which can be up to 80% cheaper than branded drugs.
• It targets pharmaceutical benefit managers (PBMs) by improving fee disclosure and promoting a transparent drug value chain.
• By curbing the influence of middlemen and encouraging competition, the policy seeks to create a more accountable prescription drug market.

Historical Challenges and Industry Pushback

• Trump’s earlier MFN proposal in 2018 was blocked by a federal court due to procedural issues.
• The Pharmaceutical Research and Manufacturers of America (PhRMA) has opposed the MFN policy, warning of reduced innovation and investment in drug development.

Implications and Recommendations

If successful, the Executive Order could redirect billions in Medicare savings towards other healthcare priorities. Reduced out-of-pocket costs could improve patient adherence to essential treatments. However, the MFN policy might strain international trade relationships and disrupt pharmaceutical R&D funding. State importation programs also pose logistical and safety challenges, necessitating robust oversight.

The order challenges free-market principles, potentially alienating some Republican lawmakers. For market access professionals, the focus on generics and biosimilars offers opportunities but complicates pricing strategies for branded drugs. The emphasis on PBM transparency could reshape negotiations between manufacturers, payers, and intermediaries.

Recommendations for Decision-Makers

• Monitor legal developments closely, preparing for potential injunctions against the MFN policy.
• Utilise real-time data to assess the impact of price reductions on patient access and outcomes.
• Engage in policy dialogue to balance cost reductions with innovation incentives.
• Support states in implementing importation programs with stringent quality controls.

Conclusion

President Trump’s Executive Order on drug pricing reform represents a bold attempt to address one of the most pressing issues in US healthcare. By targeting Medicare reforms, supporting low-income patients, and introducing the MFN policy, the administration aims to deliver significant cost savings. However, historical challenges, industry opposition, and legal risks highlight the complexity of implementation. Decision-makers must navigate these waters carefully, ensuring that cost reductions do not compromise innovation or access.

Sources