Trump Reverses Some Biden Drug Pricing Initiatives, Potentially Impacting Medicare Costs

President Donald Trump’s second-term health care agenda is taking shape with a clear focus on undoing several Biden-era policies.¹ On Monday, Trump signed an executive order reversing initiatives aimed at reducing prescription drug costs for Medicare and Medicaid recipients, expanding the Affordable Care Act (ACA), and increasing protections for Medicaid enrollees.

Experts suggest the changes may have little immediate impact on out-of-pocket (OOP) health care costs for most Americans. | Image credit: inthasone - stock.adobe.com

However, experts suggest the changes may have little immediate impact on out-of-pocket (OOP) health care costs for most Americans.

For instance, one Biden-era initiative overturned by Trump had instructed Medicare to explore ways to reduce drug costs, including a potential $2 monthly OOP cap on certain generic medications. However, this proposal was still in the early stages of development and its implementation was uncertain, according to Stacie Dusetzina, PhD, a health policy professor at Vanderbilt University, who spoke with NBC News.

Key initiatives by former President Joe Biden, such as the $35 monthly cap on insulin, the $2000 annual OOP cap on prescription drugs, and Medicare’s authority to negotiate drug prices under the Inflation Reduction Act (IRA), remain unaffected by Trump’s executive actions. However, these moves could hint that the incoming administration may be unwilling to move forward on any of these laid-out polices.

What’s Happening to the ACA?

Trump reversed Biden’s executive order that extended enrollment periods for ACA plans in most states and provided additional funding to third-party organizations assisting with ACA sign-ups.² These measures had contributed to the Biden administration nearly doubling ACA enrollment to approximately 24 million people, though much of the increase was driven by enhanced government subsidies that reduced ACA premium costs. The overturned policy allotted an enrollment period for an additional 12 weeks in 36 states, giving uninsured adults more time to sign up.¹

Trump Ends Drug Pricing Pilots

Trump revoked an executive order that had directed the Center for Medicare and Medicaid Innovation (CMMI) to develop 3 experimental drug pricing models, leaving their future uncertain.²

The first initiative aimed to assist state Medicaid programs in affording high-cost, highly effective cell and gene therapies by creating multistate purchasing agreements, allowing states to avoid payments for ineffective treatments. CMMI had already begun enrolling states in the program, with applications open until February 28, 2025.

The second model sought to reduce Medicare payments for drugs granted accelerated approval by the FDA, encouraging manufacturers to complete confirmatory trials promptly.

The third pilot project aimed to standardize $2 flat co-pays for generic drugs used to treat chronic conditions in Medicare prescription drug plans, promoting medication adherence.

Abe Sutton, a former White House and HHS aide, is expected to lead CMMI under the Trump administration.

Shifting Health Care Cost Priorities

Some of the policies Trump eliminated were previously aligned with his goals, suggesting a potential shift in his priorities, Larry Levitt, executive vice president of health policy at KFF, told NBC News.¹ By abandoning Biden’s initiative to explore new ways to lower OOP costs for prescription drugs, Levitt suggests it may signal that Trump is less focused on addressing health care costs in the US.

It also remains unclear whether the Trump administration will support Medicare’s ability to negotiate drug prices. Last week, Medicare announced the next set of drugs up for negotiation, including semaglutide (Ozempic and Wegovy).

Arthur Caplan, PhD, head of medical ethics at NYU Grossman School of Medicine, told NBC News that Trump seems to be taking a cautious approach on health care costs, leaving Biden's larger initiatives largely untouched. While Trump has advocated for a limited government role, Caplan said Trump is aware of the US’s significantly higher health care costs compared with other countries and may recognize the need for government intervention.

References

1. Lovelace B Jr. Trump reverses Biden policies on drug pricing and Obamacare. NBC. January 21, 2025. Accessed January 22, 2025. https://www.nbcnews.com/health/health-news/trump-reverses-biden-policies-drug-pricing-obamacare-rcna188555

2. Owermohle S, Wilkerson J, Zhang RC, et al. Trump’s initial orders reverse Biden on health care costs, protections from discrimination. Stat. January 20, 2025. Accessed January 22, 2025. https://www.statnews.com/2025/01/20/trump-executive-orders-health-care-drug-pricing-aca-covid-gender-discrimination/