No, President Trump Did Not Actually Sign an Executive Order That Would Increase Drug Costs for Beneficiaries

On inauguration day, President Trump issued an executive order rescinding several Biden-era health care initiatives, including 3 experimental drug pricing models developed by the Center for Medicare and Medicaid Innovation (CMMI). Oh boy did this cause an uproar! There’s too much misinformation, so I’m dedicating this week’s Behind the Bill to explain why no, President Trump did not actually increase drug costs for Medicare beneficiaries his first day in office.

What Actually Changed?

The executive order specifically revoked Biden's Executive Order 14087, which had directed CMMI to test 3 experimental models:^1,2

1. Medicare High-Value Drug List Model: A voluntary program offering generic drugs for chronic conditions at $2 copays.
2. Cell and Gene Therapy Access Model: Allowing state Medicaid agencies to negotiate multi-state agreements for gene therapies.
3. Accelerating Clinical Evidence Model: Adjusting payments for drugs with accelerated FDA approval to incentivize completion of confirmatory trials.

Importantly, none of these models had been implemented yet—they were still in development when Trump took office. His executive order simply removes the previous directive to explore additional innovative models.

What Remains Unchanged

Despite some misleading social media claims (I’m looking at you, LinkedIn), Trump's action does not affect key Medicare drug pricing provisions established by the Inflation Reduction Act (IRA), including:^3,4

• The $2000 annual cap on out-of-pocket prescription drug costs
• The $35 monthly insulin copay cap
• Medicare's authority to negotiate drug prices
• The recently announced selection of 15 additional drugs for price negotiation in 2027

Looking Ahead: Implementation Continues

On January 17, 2025, just days before Trump's inauguration, the Centers for Medicare & Medicaid Services (CMS) announced the next 15 drugs selected for price negotiations, which include popular medications like Ozempic and Janumet.⁵ This selection starts a statutory process that manufacturers must follow if they wish to keep their drugs in Medicare.

While Trump's executive order signals potential shifts in drug pricing policy, it cannot unilaterally dismantle the IRA's reforms. Any substantial changes to the Medicare Drug Price Negotiation Program would require:

1. Congressional action to modify or repeal the IRA
2. New rulemaking processes by CMS
3. Potential changes to implementation guidance

Seniors Should Not Experience Increased Costs

Medicare beneficiaries should not experience immediate changes to their drug coverage or costs as a result of Trump's executive order. The IRA's core protections, including the out-of-pocket caps and negotiated drug prices, remain in effect.

However, the order may signal the administration's broader approach to drug pricing reform. The sweeping array of executive orders made by President Trump within the past 2 weeks (36 alone in his first week, he’s been busy!) reverses many previous executive orders. This is signaling his desire to clean the slate, so to speak, and not necessarily a dramatic move; within Biden’s first 100 days in office, he reversed 24 of Trump’s policies.⁶ So, this is simply an inherent byproduct of the stark ideological differences between parties.

The political landscape has changed for President Trump is his second term; however, with Republican control of Congress and a 6-3 conservative majority on the Supreme Court, the administration has potentially stronger institutional support for its policy agenda. Last week, we watched Robert F. Kennedy Jr acknowledge different ‘interpretations’ of core concepts of Medicare and Medicaid in 2 Senate confirmation hearings and learned just yesterday that the Senate Finance Committee approved the candidate 14-13 along party lines, further illustrating this shifting dynamic.⁷

While it would take an act of Congress to repeal the IRA, the implementation of the law could look quite different under new leadership.

It's sending a clear message to constituents: everything is up for debate, and nothing is off-limits.

Join me next Wednesday as I continue to highlight key court decisions, review notable health policies, and analyze what's behind the bill in health care.

References

1. Forster SL, Lamparelli RL, Menack S. Trump Executive Order signals drug pricing reforms likely on the horizon. Morgan Lewis Health Law Scan. January 28, 2025. Accessed February 3, 2025. https://www.morganlewis.com/blogs/healthlawscan/2025/01/trump-executive-order-signals-drug-pricing-reforms-likely-on-the-horizon

2. Centers for Medicare & Medicaid Services. About the CMS Innovation Center. CMS.gov. Updated November 6, 2024. Accessed February 4, 2025. https://www.cms.gov/priorities/innovation/about

3. Jaffe A. Trump order didn't reverse all of Biden's measures to lower drug costs. FactCheck.org. January 28, 2025. Accessed February 3, 2025. https://www.factcheck.org/2025/01/trump-order-didnt-reverse-all-of-bidens-measures-to-lower-drug-costs/

4. Steinzor P. Trump reverses some Biden drug pricing initiatives, potentially impacting Medicare costs. AJMC. January 22, 2025. Accessed February 3, 2025. https://www.ajmc.com/view/trump-reverses-some-biden-drug-pricing-initiatives-potentially-impacting-medicare-costs

5. 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 February 3, 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

6. Hickey C, Merrill C, Chang RJ, et al. Here are the executive actions Biden signed in his first 100 days. CNN. Updated April 30, 2021. Accessed February 4, 2025. https://www.cnn.com/interactive/2021/politics/biden-executive-orders/

7. Nix J. RFK Jr. clears Senate committee after assurances on vaccines. Bloomberg Law. February 4, 2025. Accessed February 4, 2025. https://news.bloomberglaw.com/health-law-and-business/rfk-jr-clears-senate-committee-heads-to-full-vote-to-lead-hhs