Among the dozens of Biden-era executive orders he rescinded on day one, President Trump nixed one that aimed to explore new health care payment models that would lower prescription costs for Medicare and Medicaid beneficiaries.
Trump rescinded former President Biden’s Executive Order 14087, “Lowering Prescription Drug Costs for Americans.” He included this directive among those he deemed to be “unpopular, inflationary, illegal, and radical practices.”
Biden’s executive order asked the Health and Human Services (HHS) secretary to look into “new health care payment and delivery models that would lower drug costs and promote access to innovative drug therapies for beneficiaries enrolled in the Medicare and Medicaid programs.”
The secretary could include models “that may lead to lower cost-sharing for commonly used drugs and support value-based payment that promotes high-quality care.” This executive order was meant to complement and build off of the health care cost provisions included in the Inflation Reduction Act (IRA).
The Centers for Medicare and Medicaid Services (CMS) did explore payment models in respect to this order, publishing a report of its findings in 2023.
Among the models that were looked into, then-HHS Secretary Xavier Becerra chose one that would have allowed Medicare Part D sponsors to offer a “Medicare-defined standard set of approximately 150 high-value generic drugs with a maximum co-payment of $2 for a month’s supply.”
HHS also looked into a system that would have incentivized manufacturers to “expedite and complete confirmatory clinical trials” and have CMS develop for drugs approved under accelerated approval.
This method would have theoretically reduced CMS spending on clinical confirmatory trials that missed their completion date. At the time of report, it was noted about a third of drugs approved through the accelerated approval process had incomplete confirmatory trials.
Another model HHS proposed for testing on looked into whether CMS could coordinate multi-state outcomes-based agreements (OBA) with manufacturers of high-cost specialty drug, instead of having state Medicaid agencies pursue individual OBAs. This would have reduced costs by in theory pooling “bargaining power to obtain discounted pricing.”
While these models were explored, they ultimately were not put into action during the Biden administration.
Several Biden-era provisions aimed at lowering prescription costs for Medicare beneficiaries will be going into effect throughout Trump’s second term. The IRA provision limiting Medicare out-of-pocket spending on prescription drugs to $2,000 went into effect at the start of this year.
The lowered prices of the first 10 drugs picked for Medicare negotiations will go into effect at the start of 2026 and the Medicare rebate program yielded temporary savings on dozens of prescriptions last year.
