Pharma’s wins and losses in Trump’s sprawling executive order on drug prices

Title

Pharma's Mixed Fortunes:
Wins and Losses in Trump’s Sweeping Executive Order on Drug Prices

Keywords

Trump executive order
drug pricing
Medicare negotiation
pill penalty
small molecule drugs
biologics
pharmacy benefit managers (PBMs)
biosimilars
drug importation
pharmaceutical industry
healthcare transparency
Inflation Reduction Act (IRA)
insulin pricing
prescription drug reform

Key Facts

Executive Order Overview
- President Donald Trump signed a broad executive order on April 15, 2025, to further lower prescription drug prices, building on prior efforts and expanding on some provisions introduced in the Biden administration’s Inflation Reduction Act2 3 4.
- The executive order directs agencies to focus on Medicare reforms, increase transparency, promote competition, and address the influence of pharmacy benefit managers (PBMs)2 3 4.

Wins for Pharma
- The order calls for ending the so-called "pill penalty" in the IRA, which currently allows Medicare price negotiations for small molecule drugs (like pills and tablets) after 9 years, but not until 13 years for biologics (complex, often injectable drugs)5 7 10.
- By seeking to align the negotiation timelines, small molecule drug manufacturers would get an extra four years of exclusivity before facing Medicare pricing pressure, which the industry has lobbied for as an incentive for innovation6 8 10.
- Pharma groups and industry analysts largely view this as a significant win, potentially boosting investment in small molecule drugs and reducing the incentive to shift R&D focus exclusively to biologics5 7 10.

Losses and Controversies for Pharma
- The executive order maintains the Medicare Drug Price Negotiation Program, which remains a contentious issue for the industry, as it subjects high-cost drugs to government price negotiations and could erode revenues over time3 6 7.
- Patient advocacy groups and some lawmakers criticize the extension of negotiation-free periods for small molecule drugs, arguing it will result in higher costs for patients and delay access to more affordable generics5 7 10.
- Implementation of the changes to negotiation timelines would require Congressional approval, so the order itself does not immediately alter the law5 7 10.

Broader Industry and Patient Impacts
- The order includes measures to increase transparency around PBM fees, tackle anticompetitive practices, and facilitate drug importation from Canada to improve access and competition2 4 8.
- It also mandates lower out-of-pocket costs for insulin and injectable epinephrine for low-income patients and the uninsured, with some prices set as low as $0.03 for insulin and $15 for epinephrine, plus small administrative fees2 4.
- Efforts to expedite approval of generics and biosimilars are expected to bolster competition and generate significant savings, estimated up to $181 billion over five years1 2.

Legal and Market Uncertainties
- Many provisions, especially changes to Medicare negotiations, require legislative action. There is anticipation of industry pushback and possible litigation around some directives4 6.
- Tariff threats and importation policies could complicate market dynamics, with ongoing investigations into the national security implications of pharmaceutical imports5.

## Summary Table:
Pharma's Wins and Losses

| Area | Pharma Outcome | Patient/Market Impact |
|--------------------------------------|------------------------------|------------------------------------------------------|

| End of "Pill Penalty" | Win:
Longer exclusivity for small molecule drugs | Potential delay in generics, higher costs short-term |

| Medicare Drug Price Negotiation | Loss:
Program maintained, future price pressure | Savings for Medicare, possible access improvements |

| PBM Transparency & Reform | Mixed:
Increased scrutiny, but more transparent practices may benefit efficient players | Potential for lower costs, more competition |

| Biosimilars & Generics Promotion | Mixed:
More competition for branded drugs | Lower prices, greater access for patients |

| Drug Importation | Loss:
New competition from Canada | Possible lower prices, broader access |

| Insulin and Epinephrine Price Caps | Loss:
Direct price controls on key products | Major affordability gains for patients |

| Tariffs & Import Investigations | Uncertain:
Possible sector-specific duties | Potential supply chain disruptions |

Conclusion

President Trump’s executive order delivers a complex policy package for drug pricing. While pharmaceutical companies score a major win with the call to eliminate the pill penalty and secure longer protection for small molecule drugs, they face ongoing losses with continued Medicare price negotiation and greater scrutiny on PBMs. The order is positioned to generate savings for patients and broader access to key drugs but will require Congressional support and effective implementation to realize its ambitions4 5 7 10.