President Trump Executive Order Analysis from Boesen & Snow Law Firm

Talking Points & Analysis of President Donald J. Trump Executive Order: LOWERING  DRUG PRICES BY ONCE AGAIN PUTTING AMERICANS FIRST 

Author: Mark Boesen, J.D., PharmD

For a PDF version of this analysis, click here

1. Medicare Reimbursement Reform-Hospital Drug Reimbursement (Esp. in 340B and  Ambulatory Care Departments) 

The order directs Medicare to align its drug reimbursement rates with the actual acquisition costs  that hospitals pay for the same drugs. This move is intended to stop overpayment for drugs,  particularly small molecule drugs administered in hospital departments. By paying closer to the  real cost of the medication, this change is expected to generate substantial savings for Medicare  and lower beneficiary cost-sharing, while discouraging markups that currently distort prescribing  patterns and drug availability. The order introduces a policy ensuring that the same drug will be  reimbursed at the same rate, regardless of the setting in which it's administered—be it a hospital,  clinic, or physician office. This eliminates location-based payment discrepancies that can cause  price inflation. For non-specialty drugs that are infused or oral medications provided in outpatient  settings, this could significantly reduce costs and disincentivize providers from selecting costlier  settings purely for higher reimbursement.

Note: This provision, which requires CMS to align reimbursement closer to acquisition cost can and should be leveraged to the BENEFIT of community pharmacies that pay much higher Class of Trade costs than hospitals. 

2. New Guidance on Medicare Price Negotiation Program (Inflation Reduction Act  Reforms) 

What it says: 

The U.S. Department of Health and Human Services (HHS) has 60 days to propose new  guidance for how Medicare will negotiate drug prices in future years—specifically for drugs that  will have negotiated prices starting in 2028, and how manufacturers will implement the  negotiated “Maximum Fair Price” in 2026–2028.

This guidance should: 

• Increase transparency in how the negotiation process works. 

• Focus negotiations on the most expensive drugs in Medicare. 

• Avoid harming pharmaceutical innovation in the U.S. 

• Assuring that the discounts are NOT passed on to the pharmacies. 

What this means (plain English): 

Medicare’s drug negotiation program is still new, and the administration wants to make it more  open, smarter in choosing which drugs to negotiate, and friendlier to innovation. This could  impact both biologics and “small molecule drugs” (drugs that aren’t specialty medications), but it emphasizes making sure high-cost drugs get attention first. Manufacturers will have to start  preparing now for how to comply with pricing in coming years. 

3. Reducing Medicare Part D Premiums 

What it says: 

A team led by the President’s domestic policy advisors must, within 180 days, give the President  ideas on how to stabilize or lower premiums in Medicare Part D (the part that covers most  outpatient prescriptions). 

What this means (plain English): 

The government is looking for ways to make Part D cheaper for seniors, without raising prices  in other areas. Since Part D primarily covers “small molecule drugs” (like cholesterol, blood  pressure, and diabetes meds), any strategy to lower premiums may involve tackling those drug  prices without burdening pharmacies with the cost savings. 

4. Fixing the Disparity Between Small Molecules (Non-Specialty) and Specialty/Biologics What it says: 

HHS is directed to work with Congress to eliminate the unfair difference in how small molecule  drugs and biologics are treated under the IRA's negotiation timeline.

Right now:

• Small molecule drugs become eligible for negotiation 9 years after FDA approval. 

• Biologics become eligible 13 years after approval. 

This rule asks to treat both types of drugs the same, so companies don’t stop investing in small  molecule R&D due to shorter exclusivity. 

What this means (plain English): 

Today, if a company makes a small molecule drug, Medicare can negotiate the price sooner than  if they made a biologic (like a complex injectable). That means there’s less time to make back  the money on small molecule drugs, so companies may stop developing them. This rule wants to  fix that by leveling the playing field, so companies are just as likely to develop new non specialty drugs (aka, low-cost drugs) as they are expensive biologic drugs. It also says that these  changes must not increase overall Medicare costs. 

Why This Section Matters: 

• It protects innovation in small molecule drug development (which is cheaper and often  easier to manufacture than biologics). 

• It could slow the shift away from making traditional medications. 

• It directly influences negotiation timing, pricing policy, and drug availability for  Medicare patients.

• It’s a recognition that the Inflation Reduction Act unintentionally discouraged investment  in new non-specialty drugs, and this is the administration’s way of correcting that. 

5. 340B Drug Pricing and Insulin Affordability 

The executive order mandates that insulin and injectable epinephrine be offered at highly  discounted prices (as low as 3 cents for insulin) to patients at Federally Qualified Health Centers.  There is also a focus is on specialty drugs here by sending a broader message about affordability.  For non-specialty drugs covered under the 340B program, the enforcement of pricing  transparency and access rules could extend lower costs to vulnerable populations and ensure  compliance among providers participating in discount programs. 

6. Facilitating Drug Importation 

States will be given new flexibility to import prescription drugs from Canada and other trusted  countries, where the same medications are often available at a fraction of the U.S. price. Because  most imported medications are small molecule oral drugs (like blood pressure or cholesterol  medications), this provision could significantly benefit consumers seeking cheaper alternatives— particularly if FDA clears more importation channels for generics and branded small molecule  drugs. Note: The states, including Florida that have an approved importation program, are  finding it difficult to manage since the Canadian government generally restricts exportation to  US of Canadian sourced drugs. 

7. Discount Arrangements for Rare Disease Treatments 

The order supports state Medicaid agencies in negotiating steep discounts for rare disease drugs,  often some of the highest-priced treatments on the market. While many rare disease therapies are  biologics, some are small molecule therapies with limited competition. This provision may open up new pricing models for state-based programs that offer high-cost treatments, potentially  making these drugs more accessible for underserved patients. 

8. PBM Transparency and Rebate Reform 

The Executive Order targets Pharmacy Benefit Managers (PBMs), requiring them to disclose the  payments they receive and prohibit practices that conceal rebates or fees from patients and  employers. This is a critical development for small molecule drug pricing, as PBMs often  negotiate formularies and reimbursement levels in ways that can disadvantage generics or favor  higher-cost branded specialty drugs. Greater transparency could lead to fairer pricing, better  access for independent pharmacies, and reduced out-of-pocket costs for consumers.

Specific intended elements: 

• Prevent PBMs from setting their own “pay to play” formularies. 

• Require all claims data be available to the payor (e.g., the employer) to prevent spread. 

• Restrict PBMs from requiring “specialty tier” medications come from a specific  pharmacy (like the one the PBM owns). According to OMB, “there is nothing special  about specialty drugs.”

• Prohibit GER/BER contracts and require pharmacies get fully reimbursed for the cost of  the medication. 

• Remove confidentiality clauses that prohibit a health plan from talking with the  manufacturer about pricing. 

9. Accelerating Generic and Biosimilar Approvals 

To drive competition and reduce prices, the order reinforces efforts to streamline the approval  process for generic and biosimilar drugs. For non-specialty medications, this means removing  barriers that delay the market entry of cheaper, therapeutically equivalent alternatives. By  increasing the number of generics available, this measure could put substantial downward  pressure on prices for everything from blood pressure meds to psychiatric drugs. 

10. Mandatory Drug Price Transparency 

The order requires price transparency throughout the drug supply chain. Manufacturers, insurers,  PBMs, pharmacies, and even prescribers must disclose pricing data that directly affects treatment  decisions. For small molecule medications, which are often widely prescribed but still subject to  price variation, this initiative will empower patients to compare prices, understand out-of-pocket  costs, and make informed decisions about treatment options. 

11. Reinstating Successful Trump-Era Drug Pricing Policies 

The final section of the order calls for a revival of previous Trump administration policies that  were rolled back in recent years—particularly rules that required hospitals to post prices,  eliminated “gag clauses” preventing pharmacists from sharing cheaper alternatives, and capped  co-pays for insulin. These earlier reforms laid the foundation for more equitable and transparent  drug pricing and their reinstatement is intended to reinforce the administration’s broader cost control strategy, especially for everyday prescriptions filled at retail pharmacies. 

Some parts of the Executive Order can happen without Congress, but others—especially major  changes like fixing the small molecule vs. biologic disparity—will require new legislation. 

What Can Be Done WITHOUT Congress: 

These parts of the EO rely on existing legal authority and administrative rulemaking, so they can  move forward under current law: 

1. HHS Guidance on Medicare Price Negotiation (Sec. 3(a)) 

HHS already has the authority under the Inflation Reduction Act (IRA) to set rules and  issue guidance about how the drug price negotiation program works. 

The EO simply instructs HHS to do more—faster, clearer, and more transparently— within the legal boundaries already in place. 

2. Recommendations on Stabilizing Medicare Part D Premiums (Sec. 3(b)) The EO only asks White House policy staff and HHS to make recommendations. That’s  internal policy coordination and does not require congressional approval.

3. Administrative Efforts on Transparency, PBM Reform, and Site-Neutral Payments Agencies like CMS (Centers for Medicare & Medicaid Services) and HHS can issue  proposed rules, guidance, or regulations under existing law for things like PBM fee  disclosure, price transparency, and site-neutral payments. 

What REQUIRES Congressional Action: 

These parts of the EO cannot happen without new legislation: 

Fixing the Non-Specialty vs. Specialty/Biologic Negotiation Timeline (Sec. 3(c)) Right now, the IRA is clear: 

• Small molecule drugs (non-specialty drugs) become eligible for Medicare price  negotiation 9 years after approval. 

• Biologics get 13 years. 

To change this timeline, Congress would need to amend the Social Security Act, specifically the  IRA sections (42 U.S.C. §§ 1320f–1320f-7). 

HHS can propose or advocate for this, but it cannot change the law on its own.

• Major Structural Changes to Medicare Drug Benefits (like rebate mandates, importation  expansion, or hard caps on Part D premiums) 

Most of these changes would require Congress to appropriate funding or change statutory  language. 

Summary