President Trump signed an executive order on Tuesday outlining a series of actions intended to lower drug prices, including helping states import drugs from Canada.
The policies were more modest than proposals to reduce drug prices that Mr. Trump offered in his first term.
And one of his new directives could increase drug prices. It calls for the Trump administration to work with Congress to change a 2022 law in a way that could defang a negotiation program meant to reduce Medicare’s spending on commonly used or costly drugs.
Such a change has the potential to increase costs for the government, because it would most likely delay the existing timetable for some drugs to become eligible for Medicare price cuts.
Depending on how it is structured, it could increase Medicare’s drug spending by billions of dollars compared with outlays under the current law. The negotiation program was approved by a Democratic-controlled Congress and supported by former President Joseph R. Biden Jr.
The executive order says that changes to the Medicare price negotiation program should be “coupled with other reforms to prevent any increase in overall costs to Medicare and its beneficiaries.”
Drug pricing experts said that with the exception of the Medicare negotiation proposal, other directives in the executive order had the potential to save money for patients and government programs. None of the actions represented major changes that would lead to huge savings.
One provision would lower the co-payments that some people on Medicare face when they undergo treatments like chemotherapy infusions at certain clinics and at outpatient hospital sites. Another would give certain lower-income people access to heavily discounted insulin and epinephrine injections.
Tuesday’s executive order was the most prominent move Mr. Trump’s second administration has made so far on drug pricing.
It followed Mr. Trump’s decision to move closer to imposing tariffs on imported pharmaceuticals, which manufacturers are likely to try to pass on. That could force government programs, employers and patients to pay more for some medications and could exacerbate shortages of critical drugs.
Some of the directives, like changing the Medicare negotiation program, would require congressional approval. The pharmaceutical industry has fiercely opposed some of the ideas in the executive order while supporting others.
Mr. Trump has long complained that the United States pays much more than other wealthy countries for the same drugs. Notably absent from the order was a reprise of a most favored nation pricing policy, which he proposed in his first term aimed at making U.S. drug prices closer to those that peer countries pay. Like several of Mr. Trump’s first-term policies on drug prices, his most favored nation plan was halted by federal courts. Last fall, Mr. Trump‘s presidential campaign walked back the proposal.
Here’s a breakdown of some of the most notable parts of Mr. Trump’s executive order.
Eliminating the ‘pill penalty’
The order directs Robert F. Kennedy Jr., the health secretary, to work with Congress to address a difference in how certain types of drugs are treated in the Medicare negotiation program.
Under the law, pills and other drugs produced through synthetic processes do not become eligible for price cuts until they have been on the market for nine years. Drugs known as biologics — created from living cells and often given as an infusion — would not be eligible for 13 years.
Drugmakers, who unsuccessfully sued the federal government over the program, bitterly call the difference a “pill penalty.” They say it discourages them from developing medications, because they have less time to build up sales before the price cuts kick in, depriving patients of new treatments. They have lobbied for pills to be exempted from the price cuts for 13 years instead of nine.
Lawmakers have introduced legislation that would change the law to treat the two types of drugs equally.
The president’s order does not specify how many years each type of drug should be exempt from Medicare price cuts.
In a statement on Tuesday, Alex Schriver, an official at the drug industry’s main lobbying group, PhRMA, said that his organization would work with the Trump administration and Congress to “advance common sense solutions that lower costs and improve access for Americans.”
Biden officials oversaw the first round of negotiations in the program, resulting in price cuts that will go into effect in 2026. The Trump administration is overseeing negotiations this year for lower prices in 2027 for drugs including the blockbuster weight-loss medication sold as Ozempic and Wegovy.
The White House said in a fact sheet on Tuesday that it wanted to capture more savings for the government with the Medicare negotiation program than the Biden administration did last year. That would be difficult to do if Congress reduces the time during which Medicare can obtain lower prices.
Importing drugs from Canada
The executive order directs the Food and Drug Administration to improve the process by which states can apply to import lower-cost drugs from Canada.
In his first term, Mr. Trump created a pathway enabling states to pursue these imports. Under the Biden administration, the F.D.A. approved one importation program, in Florida. As of late last year, Florida had not yet begun importing drugs from Canada. The pharmaceutical industry opposes the idea because it would cut into its profits.
If Mr. Trump follows through on imposing tariffs on pharmaceuticals, importing drugs from Canada would be unlikely to offer the same savings as in the past.
Different co-pays at different clinics
The order calls for rules to equalize the fees doctors are paid to administer drugs to patients across settings.
Currently, many medical practices owned by hospitals can charge higher fees to Medicare than independent practices can, even for the exact same services. Because Medicare beneficiaries are often responsible for a percentage of their medical bills, those higher costs for the visits are passed along in the form of co-payments.
Efforts to equalize such payments broadly have been under bipartisan discussion for years in Congress but have faced opposition from hospitals, who say they require the higher payments. Legislation passed during the Obama administration addressed some of these payment differences.
Encouraging cheaper copycats
Mr. Trump directed the F.D.A. to make recommendations for streamlining approvals for generic drugs and biosimilars, which are lower-priced copycats of biologic drugs.
The first biosimilar was approved in 2015, with dozens more approved since. There was widespread hope that biosimilars would displace patent-protected brand-name biologics, such as Humira for conditions like arthritis, that sent drug costs soaring. But patients have been slow to switch over, and savings have not materialized as quickly as many wanted.
Insulin for the poor
Mr. Trump revived an executive order from his first term directing community health clinics to provide insulin and epinephrine injections at heavily discounted prices to certain lower-income people, including the uninsured.
The clinics balked when Mr. Trump first proposed the idea in 2020. The Biden administration soon froze the regulation, saying it created too much of an administrative burden for the clinics.