Trump could make changes to Medicare drug price negotiations

President Donald Trump likely won’t cast off a landmark process that permits Medicare to barter drug prices with manufacturers, whilst he moves to erase Joe Biden’s other historic policy accomplishments. 

But Trump will likely make some changes to those price talks, and it might not require help from Congress. 

“Trump is trying to nibble around the perimeters of the law,” said Matthew Kupferberg, a partner in Frier Levitt’s Life Sciences Group, adding that the president is “not trying to completely abandon the drug negotiation process at this point.”

It’s still unclear which way Trump will lean, nonetheless. While some lawmakers and health policy experts said Trump could weaken the negotiations in a way that helps the pharmaceutical industry, other experts said he could double down and check out to save lots of patients and the federal government even more cash to outdo his predecessor. 

The trail he takes could have huge stakes for the costs 68 million Medicare beneficiaries within the U.S. pay for his or her medications. It should even have big implications for corporations like Novo Nordisk, Bristol Myers Squibb, Pfizer and Merck, amongst others whose drugs were included in the primary two rounds of talks.

The negotiations are a key provision of Biden’s Inflation Reduction Act, or IRA, that goals to lower prescription medicine costs for seniors and save the federal government nearly $100 billion in Medicare spending over the subsequent decade. The pharmaceutical industry fiercely opposes the value talks, arguing in a flurry of lawsuits that they threaten profits and discourage drug innovation.

The Trump administration has offered few specifics on its approach to the negotiations, aside from saying in January that it would aim for “greater transparency” in the continued second cycle of the method and listen to any ideas for improving it from external stakeholders.

Making significant changes to the law or repealing it altogether can be an uphill battle since it requires help from Congress, where Republicans hold slim majorities. Reining in high health-care costs has strong bipartisan support in a nation where patients pay two-to-three times more for prescribed drugs than people in other developed countries, making it a potentially unpopular move for Trump.

So the Trump administration could move to implement the availability otherwise than Biden did, including by changing how the federal government interprets the law’s selection criteria for drugs, amongst other potential changes.

“I believe it’s an issue of how they interpret among the statutory language,” said Juliette Cubanski, deputy director of this system on Medicare policy at KFF, a health policy organization. 

Cubanski said we are able to expect a primary glimpse at any changes in the approaching months.

The Trump administration will start the months-long negotiation process for a second cycle of 15 drugs, which could have latest prices go into effect in 2027. The Biden administration chosen those medicines in January before Trump took office. Drugmakers have until the tip of February to come to a decision whether to take part in the talks, which they likely will because they otherwise face stiff financial penalties.

Throughout the first round of the talks, Medicare provided opportunities for public input from patients, caregivers and consumer groups. But Kupferberg said the Trump administration could move to usher in other stakeholders beyond manufacturers and patients, like insurers and even middlemen called pharmacy profit managers. 

“It might be a wider sort of negotiation process,” he said. 

The administration could also reinterpret the rules of the law, which could change what products get chosen and the way much prices fall, in line with Amy Campbell, associate dean for law and health sciences on the University of Illinois Chicago School of Law.

For instance, the IRA says the drugs chosen for negotiations should have been in the marketplace for not less than seven years without generic competitors, or 11 years within the case of biologic products reminiscent of vaccines. However the Trump administration, when choosing one other round of medicine, could have “looser standards” for determining whether a drug has competition available in the market and needs to be exempt from negotiated prices, Campbell said. 

Trump could also revise what Medicare considers one drug for the aim of negotiations, KFF’s Cubanski said. Currently, different products that share the identical energetic ingredient might be chosen as a single product, which the pharmaceutical industry opposes. 

The Biden administration, for instance, included three of Novo Nordisk’s branded medications with the identical energetic ingredient – semaglutide – as one product within the second cycle of price talks. That features the burden loss drug Wegovy, diabetes pill Rybelsus and the obesity injection Ozempic. Of the three, Ozempic makes up the lion’s share of Medicare spending.

Either of those changes to how Medicare selects drugs may gain advantage drugmakers and lessen the revenue they lose from lower prices. 

The larger query is how aggressively Medicare will negotiate prices under Trump, Cubanski said. Currently, the ultimate negotiated price for a drug cannot exceed an upper limit, or “ceiling” price, established by the IRA.

Trump could influence whether Medicare’s initial price offer for a drug is closer to the ceiling price, which could weaken this system’s ability to secure a deeper discount. 

Cubanski said bipartisan laws was introduced last 12 months that proposes eliminating the pill penalty. If that bill makes it through Congress and to Trump’s desk, “I do not see why he would not sign it,” Cubanski said. 

She added that there appears to be growing interest in legislative changes to the negotiation program, but “whether you get enough support in Congress remains to be really an open query.” 

There’s not the identical level of bipartisan support for changes to the IRA as there may be for efforts like pharmacy profit manager reform, said Jesse Dresser, partner in Frier Levitt’s Life Sciences Department. 

“I could see something like [PBM reform] happening loads prior to I could see attempting to open up the IRA and tweak it, even when it’s something that the administration might ultimately get behind,” Dresser said. 

The pharmaceutical industry’s legal challenges, which argue that the talks are unconstitutional and needs to be stopped, have up to now been unsuccessful in court. Nine lawsuits were ongoing as of January.

“Will the Trump administration proceed to defend this system? Or possibly not as aggressively defend this system?” Cubanski said. “I believe those are some key questions.” 

If the Trump administration stops defending this system in court, judges could then make decisions on the matter with none opposition, Kupferberg said. But he said he doesn’t imagine the administration will want that final result. 

The Trump administration would likely “wish to take control of that process, where the parties work out an agreement or revise and alter the interpretation of the law,” Kupferberg said. 

He added that it doesn’t seem to be Trump would want all the negotiation program to vanish based on the lawsuits. That is since it would depart Trump within the position to provide you with a alternative for Medicare drug price negotiations, and we “just have not seen one yet” from him, Kupferberg said.