President Trump announced an executive order to lower drug prices, similar to his previous 'Most Favored Nation' policy that was blocked by courts and rescinded. The new order would potentially base US payments on the lowest prices found worldwide for certain medications, potentially impacting Medicare.
While the policy could lead to savings for both Medicare and patients, experts question its effectiveness and potential consequences. Concerns include potential limitations to patient access to medications and possible court challenges. The pharmaceutical industry strongly opposes the plan, citing potential negative impacts on innovation and investment.
Trump's prior drug pricing initiatives included tariffs on pharmaceutical imports. This latest order comes as the Trump administration seeks to achieve spending cuts. While Trump previously suggested moving away from this model, the initiative resurfaced as a potential way to meet spending reduction targets.
The administration previously introduced a similar policy, finalized in 2020, that would have saved an estimated $86 billion. The Democrats' Inflation Reduction Act of 2022 granted Medicare the power to negotiate drug prices, impacting the context of Trump's latest initiative.