Medicare Drug Negotiations 2.0: New Administration, Same Mission?
Last week brought 2 major developments in health care policy: President Trump's inauguration and the Centers for Medicare and Medicaid Services’ (CMS) announcement of 15 additional drugs selected for Medicare price negotiations. While these events might seem disconnected, they represent an interesting convergence of old policies meeting new leadership.1,2
The Second Round Takes Shape
CMS's selection includes some heavy hitters—most notably Ozempic, Wegovy, and Rybelsus (all forms of semaglutide), which have dominated headlines for their weight loss properties. The full list of 15 drugs represents about 14% of Medicare Part D spending, and, when combined with the first round of negotiations, accounts for over a third of Medicare's prescription drug costs.3
Between November 2023 and October 2024, approximately 5.3 million Medicare beneficiaries used these medications to treat conditions ranging from diabetes to cancer. The potential impact? The first round of negotiations resulted in prices 22% lower than current rates, saving Medicare about $6 billion. We could see similar savings here.3
New Sheriff(s) in Town
This is where things get interesting. While the Biden administration selected these drugs, the Trump administration—including potential US Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr and CMS Administrator nominee Dr Mehmet Oz—will oversee the actual negotiations.
On inauguration day, President Trump revoked Biden's executive order on lowering prescription drug costs. However (and this is important), this action only affects additional drug pricing initiatives that Biden had directed the Center for Medicare and Medicaid Innovation (CMMI) to explore. The Medicare Drug Price Negotiation Program itself remains intact as it was established by federal law through the Inflation Reduction Act (IRA), not by executive order.4
The distinction matters because executive orders can be reversed by subsequent administrations, while changing federal law requires congressional action. Biden's original executive order had encouraged CMMI to develop new models for reducing drug costs beyond what the IRA required. So, Trump's revocation simply removes that directive for additional initiatives.4 The real impact will depend on whether the new administration takes specific actions at CMMI to roll back ongoing demonstration projects, particularly the 3 drug pricing demonstrations launched under the previous administration.
This nuance illustrates my broader point about health care policy: while administrations can shift priorities through executive action, fundamental programs established by legislation have staying power across political transitions. For the Medicare Drug Price Negotiation Program, this means the framework remains in place even as new leadership may influence its implementation.
(Always) Looking Ahead
Drug manufacturers have until February 28th to decide whether they'll participate in negotiations.1 Given the 95% excise tax penalty for non-participation (which some might call an offer they can't refuse), we'll likely see most companies at the table.
Recently, we asked for your thoughts on the questions that concern you most when predicting changes in health care policy. The overwhelming majority focused on one: “Will changes in agency leadership fundamentally impact health care program implementation?” (Interestingly, LinkedIn poll respondents expressed concern about the impact of executive orders.)
The real question is: How will new leadership approach these negotiations? While the statutory framework remains unchanged, administrative discretion in implementation could significantly impact outcomes. Once again, I want to hear from you:
What's clear is that this program isn't going anywhere—at least not without congressional action. The infrastructure is in place, the first round of negotiations is complete, and Medicare beneficiaries are counting on those savings starting in 2026.
Join me on Wednesdays as I highlight key court decisions, review notable health policies, and analyze what’s behind the bill in health care.
References
1. HHS announces 15 additional drugs selected for Medicare drug price negotiations in continued effort to lower prescription drug costs for seniors. HHS.gov. January 17, 2025. Accessed January 21, 2025. https://www.hhs.gov/about/news/2025/01/17/hhs-announces-15-additional-drugs-selected-medicare-drug-price-negotiations-continued-effort-lower-prescription-drug-costs-seniors.html
2. Choi J. The next 15 drugs chosen for Medicare negotiation. The Hill. January 17, 2025. Accessed January 21, 2025. https://thehill.com/policy/healthcare/5091213-medicare-negotiation-drugs-list/
3. Robbins R. Medicare to negotiate lower prices for weight-loss drugs. The New York Times. January 17, 2025. Accessed January 21, 2025. https://www.nytimes.com/2025/01/17/health/medicare-prices-ozempic-wegovy.html
4. Healthcare Policy Updates Podcast. Published January 21, 2025. Accessed January 21, 2025. https://natlawreview.com/article/healthcare-preview-week-january-21-2025-podcast
