Trump Reverses Biden’s Prescription Drug Cost Cuts for Medicare and Medicaid Recipients

In a bold move, President Donald Trump has rescinded an executive order from the Biden administration that aimed to reduce prescription drug costs for Medicare and Medicaid beneficiaries. This decision came on the first day of his second term, alongside the revocation of numerous Biden-era executive decisions.

The executive order in question directed the Centers for Medicare and Medicaid Services (CMS) to explore models for lowering drug prices. Although CMS had begun planning for three potential models, none were implemented, so current Medicare and Medicaid enrollees are not facing immediate changes in drug pricing.

The Biden order had tasked the Health and Human Services Secretary with evaluating new payment and delivery models to enhance drug affordability. Among the proposed plans, one aimed to allow Medicare Part D sponsors to offer generic medications at a nominal $2 copayment, focusing on common chronic conditions. This initiative was expected to commence as early as January 2027.

Another model sought to create voluntary pricing arrangements between pharmaceutical manufacturers and state Medicaid programs for cell and gene therapies, which are known for their high costs. Participation in this model was set to begin within the current year.

The last proposal intended to link Medicare reimbursements to drug approval statuses from the Food and Drug Administration (FDA). The goal was to incentivize manufacturers to complete clinical trials by reducing payment for drugs that had received accelerated approvals. This model did not have a defined start date.

With Trump’s latest actions, the future of these initiatives remains uncertain. CMS has not yet provided clarity on the implications of this executive order.

Alongside the drug pricing measures, Trump also targeted several of Biden’s executive orders aimed at expanding affordable health coverage, especially those related to the Affordable Care Act and Medicaid provisions. However, other initiatives, such as the $35 monthly cap on insulin costs, are reportedly unaffected by these changes.