Trump Impact on Medicare Drug Price Negotiations Uncertain

As the new administration takes office, questions remain about the fate of the Inflation Reduction Act and its healthcare provisions. Just days after the CMS announced the selection of 15 additional drugs covered under Medicare Part D that will be subject to price negotiations, President Donald Trump issued several executive orders, including a pause on spending for the IRA clean energy components and rescinding some orders by former President Joseph Biden to lower healthcare costs.

Milena Sullivan

“Republicans have not been as clear as to where they stand on the issue of Medicare price negotiation,” said Milena Sullivan, who was recently promoted to policy practice director for consulting firm Avalere, part of Avalere Health. “Traditional Republicans have a philosophical opposition to price controls and government negotiation. But I don't know that that’s a sentiment that is fully shared among the full Republican caucus.”

In an interview, Sullivan pointed out that Trump has repeatedly expressed interest in international reference pricing. “When we work with stakeholders, we try to prepare for a range of scenarios where you could see anything from some sort of erosion of Medicare negotiation and maybe like rollback of certain policies or more aggressive negotiations. But these things take time.”

Additionally, as the new administration takes office, questions remains about whether the IRA drug choice regulations be modified prior to Jan. 1, 2026, or whether modifications be retrospective to the drugs already chosen, said Jeffrey Casberg, M.S., R.Ph., senior vice president of Pharmacy, IPD Analytics, and a member of the Managed Healthcare Executive editorial advisory board.

Related: CMS Releases Next List for Drug Price Negotiation

Ozempic, Rybelsus and Wegovy top the list of the newest drugs selected for Medicare Part D price negotiation. Negotiations with participating drug companies are expected to begin this year and the new prices will become effective in 2027. These drugs accounted for about $41 billion in total gross covered prescription drug costs under Medicare Part D, or about 14%, from November 2023 to October 2024 according to CMS officials.

Currently small molecules are eligible at seven years and large molecules at 11 years. “A potential modification in favor of the pharmaceutical industry would be to modify the small molecule eligibility to avoid less incentive for R&D,” Casberg said. “Maintaining innovation incentive is very important. In the first round 7 of the 10 drugs were small molecules, this year 13 of 15 are small molecules.”

In the first cycle of negotiations, Medicare negotiated with the participating drug manufacturers and reached agreement on new, lower prices for all 10 drugs. Those prices will become effective starting Jan. 1, 2026. CMS officials estimated had the negotiated prices been effect, they would have saved an estimated $6 billion in net covered prescription drug costs, or approximately 22%, across the 10 selected drugs.

Sullivan said the prediction is that the Trump administration will likely pursue its policy objectives through the budget reconciliation legislation because they still do not have filibuster proof majority in the Senate. “The entire Inflation Reduction Act was passed through reconciliation, so presumably any of the drug pricing provisions could also be repealed with just a simple majority vote.”

But attempts to roll back the IRA would face pushback, according to a recent analysis from the Brookings. Additionally, KFF’s latest poll finds bipartisan support for expanding the number of drugs to be negotiated by the federal government, and weak support for any effort to repeal the Medicare negotiations program.

Sullivan said the Trump Administration has other policy priorities, including taxes and immigration. “Many of the immediate provisions that we were presuming could make it into a reconciliation package are more things that could be sources of savings in order to pay for those other policy priorities,” she said.