Millions of Americans can barely afford to buy high-cost drugs on prescription. Low-income citizens have bitterly complained for many years that life-saving drugs that stabilize their health are too darn high. Often senior citizens must go without basic necessities to buy the skyrocketing costs of medications. Now could the tables turn in their favor? Could the president bring forth a miracle in their lives by lowering the cost of medications in the biggest move yet poised to shake up the healthcare industry?
A Chinese proverb explicitly says, “A journey of a thousand miles begins with a single step.”
President Donald J. Trump took a bold step along the journey when he executed an unprecedented move aimed at controlling the soaring prices of prescription drugs and reducing Medicare costs. The White House announced the groundbreaking executive order by the second-term President on April 15 – an order that carries the potential to dramatically change the landscape of how drugs are priced, reimbursed, and distributed nationwide.
Trump rocked the health industry to its core when he enacted an executive order focused on lowering prescription drug costs in the United States. This unique order expands on the efforts from Trump’s first term. As mentioned, the focus aims to tackle the expensive prices of medications for American patients, particularly those with Medicare benefits and low-income citizens. Trump’s order details several important strategies, such as enhancing the Medicare Drug Pricing Negotiation Program, enabling drug importation, and increasing transparency within the pharmaceutical supply chain.
Although many provisions in the order include timelines of up to 180 days, a few adjustments are expected to take effect almost immediately, which may affect hospitals, health centers, and federal taxpayers.
President Trump’s order pinpoints essential pricing mechanisms within Medicare and the 340B Drug Pricing Program. 340B represents a vital transformation in reimbursements for care locations and advocates for an expedited revision of how the government compensates for the priciest medications available. Millions of Americans relying on insulin, epinephrine, or infusion therapies should experience results sooner than anticipated.
How Much Will Trump’s Tariffs Affect the Drug Industry?
Reuters News reported drug companies are complaining over the Trump administration’s efforts to lower drug costs in the largest market, including the officials investigating to match far lower prices paid for drugs in other developed countries.
Reporters Manas Mishra and Michael Erman wrote in the Reuters article, ‘Drugs have so far been exempt from U.S. President Donald Trump’s reciprocal tariffs, but {Trump} has argued the U.S. needs more drug manufacturing so it does not have to rely on other countries for its supply of medicines.’
Up to this point, there is minimal transparency regarding the rates and schedules of these tariffs. However, the sector may take a gigantic hit if Trump immediately moves forward with his proposals, given that the U.S. brings in over $200 billion worth of prescription medications.
Firms such as Merck are already noticing the impacts, as it anticipates a $200 million loss due to tariffs imposed by the U.S. on certain nations, especially China, along with additional tariffs from other countries. news media outlets reported.
Trump Sends Warning Shot to Force Pharmaceutical Officials to Move Their Companies Back to America
Both reporters further wrote there is little clarity on the rates and timings of any such tariffs. But the industry could be in for a big surprise as Trump dropped another bombshell inside the Oval Office.
On April 8, Trump said his administration would soon impose a “major tariff on pharmaceuticals” imported to the U.S. And he predicted drug companies would move factories to the United States to avoid paying tariffs on imports. While speaking to reporters from the Oval Office on April 9, Trump said, “We don’t make our drugs and our pharmaceuticals in this country.” He added, “We’re going to put tariffs on the pharmaceutical companies, and they are going to all want to come back.”
U.S.-based Pharmaceuticals Exploit Tax Advantages Overseas
Pharmaceutical products have become a global affair over the last three decades, with large factories in India and China producing a large share of generic drugs and drug ingredients. What’s more, drugmakers have shifted production to European nations such as Ireland due to tax advantages. Factories in Ireland make brand-name drugs such as Eli Lilly’s weight-loss medication Zepbound and Merck’s cancer therapy Keytruda.
Some European companies have urged the EU to allow higher prices to bolster local investment in the face of Trump’s tariff threats. USA Today also reported in their story that pharmaceutical companies were exempted from the across-the-board 10% tariff on most imported goods announced earlier in April. The president has repeatedly said he plans trade actions for drug imports.
Included Below Are Key Points from the President’s Executive Order
“By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered.”
Section 1 Purpose: “My first term included numerous significant actions, including some of the most aggressive in recent history, to deliver lower prescription drug prices to American patients, and the message was clear:
”No longer would the executive branch sit idly by as pharmaceutical manufacturers charged patients in our nation more than those in other countries for the exact same prescription drugs, often made in the exact same places.
These modified actions in the health industry include encouraging the development of generic and biosimilar alternatives to higher-cost brand-name prescription drugs and biologics to harness competitive forces and increase access to affordable medicines. The United States also, for the first time, established a pathway to expand access to lower-cost drugs imported from outside of the country.”
For example, as stated below:
Reform Efforts: Trump said the reform efforts are designed to ensure that government-mandated discounts are passed through to patients instead of being retained by the middlemen. Trump added, “New price transparency rules were promulgated to allow patients, doctors, and employers to see the actual cost of prescription drugs before purchase. Insulin co-payments were capped for Medicare beneficiaries, and the manufacturers, instead of patients and taxpayers. Taxpayers were forced to foot the bill through the provision of larger discounts.”
“I also called on Congress to come to the table to help craft sustainable solutions that would promote innovation and affordable access for the long term. When Congress refused, I proposed the test of an innovative, new payment mechanism that would prevent drug manufacturers from charging our patients much higher prices than those found abroad.”
Taken together, as Trump recalls, “These bold actions were delivering real savings for American patients and set the foundation to dramatically narrow the price disparity between the United States and foreign nations over time.” Unsurprisingly, Trump said, “The Biden Administration reversed, walked back, or neglected many of these initiatives, undoing the progress made for American patients.”
Trump went into detail about the adverse effect of the law Biden passed while in office. “The Biden Administration signed into law the misnamed Inflation Reduction Act, which included the Medicare Prescription Drug Negotiation Program. While this program has the commendable goal of reducing the drug prices that Medicare and its beneficiaries pay, including its administratively complex and expensive regime, it has thus far produced much lower savings than projected,” the president explained.
Legal Analysis
According to an article published by Maynard Nexsen.com, legal experts noted that while the executive order includes ambitious goals, its implementation will require collaboration with Congress, particularly for changes to the Medicare negotiation program. The pharmaceutical industry expressed concerns about the potential impact on innovation and the development of new treatments.
The article in Maynard Nexsen further explains that the pharmaceutical industry has also historically opposed changes to the Medicare Drug Price Negotiation Program, citing concerns about innovation and market dynamics. As such, litigation is anticipated as stakeholders navigate the implications of the order.
Here are four additional key points enacted from the executive order to alter previous policies and practices. (Source: U.S. Constitution.Net)
-
Health Centers Must Offer Discounted Insulin and Epinephrine – Or Risk Federal Funding
Effective immediately, the Department of Health and Human Services (HHS) is required to enforce a new condition for federally funded health centers: they must offer insulin and injectable epinephrine at or below the price they paid under the 340B Drug Pricing Program. The mandate applies to all eligible patients, and health centers have just 90 days to comply or risk losing federal grants.
This directive effectively ends the practice of markups on two of the most essential and life-sustaining medications in the U.S. It marks one of the most direct federal interventions into the cost of routine, chronic-care drugs.
-
Medicare Payment Incentives Under Review
The executive order also instructs HHS to evaluate how Medicare’s payment model may be unintentionally pushing providers to administer drugs in hospital outpatient departments rather than lower-cost physician office settings. This evaluation must result in proposed changes within 180 days.
Currently, Medicare Part B reimburses hospitals at a higher rate for the same infused or injectable therapies that could be given in community-based clinics. That payment structure incentivizes providers to shift drug administration to hospital settings – often driving up both Medicare spending and patient co-pays.
Why it Matters
This process can reshape how and where patients receive drugs like chemotherapy, rheumatoid arthritis biologics, and long-acting injectables.
Hospitals may face revenue cuts if outpatient infusion reimbursements are reduced or aligned with office-based rates. Physician-owned practices could benefit, regaining ground they lost to hospital acquisitions over the past decade.
What to Watch
Expect a political battle over site-neutral payment policies. Hospitals argue that they treat sicker, more complex patients and deserve higher compensation. Meanwhile, payers and watchdog groups have long called for site-of-care parity.
-
Acquisition Cost Surveys for Outpatient Drugs Underway
Hospitals won’t have long to wait for the next major shift. The order requires HHS to begin surveying hospital outpatient departments about what they actually pay for covered outpatient drugs. These acquisition cost surveys will be used to inform future reimbursement rate adjustments – potentially cutting payments that exceed the real cost of the drugs. This process starts now. And while the data collection will take time, the goal is clear: align federal payment with actual acquisition costs.
Why it Matters
Hospitals that rely on the difference between drug acquisition cost and Medicare reimbursement may see those margins shrink. CMS is expected to use the results to propose future payment cuts under the banner of “budget neutrality,” redirecting savings elsewhere in Medicare. The survey also lays groundwork for a broader move toward reference-based pricing models – already floated in past CMS proposals.
What to Watch
Will safety-net and rural hospitals be shielded or subsidized? Could this trigger new legal battles over Medicare’s authority to reset payment baselines?
-
A New Payment Model for High-Cost Drugs Is Coming Fast
Perhaps the boldest element in the executive order is a demand for HHS to develop and propose a new alternative payment model (APM) for the highest-cost prescription drugs within 60 days.
The order doesn’t detail which drugs are targeted, but stakeholders assume it refers to gene therapies, specialty biologics, and one-time treatments with price tags exceeding $500,000. These treatments, while revolutionary, represent an unsustainable burden on public and private insurance plans.
Why It Matters
The model may introduce value-based pricing, linking payment to patient outcomes rather than list prices. Pharmaceutical manufacturers could face new pricing caps or performance guarantees for reimbursement. Medicare and Medicaid could become the testing ground for wider payment reform that private insurers eventually adopt.
What to Watch
Will the new model be rolled out as a pilot or a full-scale initiative? How quickly will drug makers and insurers adapt? And will it survive industry lobbying and legal scrutiny?
A Turning Point in Drug Pricing Debate
This executive order marks one of the most immediate and forceful federal actions on drug pricing in years. It signals a willingness to test regulatory levers quickly – and sets deadlines aggressive enough to create real market movement within weeks.
For patients, the federal action could bring much-needed relief – especially for those managing chronic illnesses or facing high out-of-pocket costs. For hospitals, pharmaceutical companies, and payers, the next 90 days will require swift recalibration.
The message is clear: the era of slow-moving price reform is over especially on high-cost drugs. The White House is moving fast, and everyone else will have to catch up.
NewsBlaze Senior Reporter Clarence Walker Jr. often writes about general interest news stories, politics, court decisions, community-based news across the USA, people making a difference stories, crime, and true crime. Aside from the aforementioned skills, Walker is also a content creator, scriptwriter, copywriter, and tech writer. Mr. Walker can be reached at HoustonNewsToday@yahoo.com, where he is the associate editor and senior reporter.
