President Donald Trump's first day in office marked a significant shift in U.S. healthcare policy as he repealed Executive Order 14087, a Biden administration measure designed to reduce prescription drug costs and expand access to innovative therapies for Medicaid recipients. While this action doesn't immediately alter existing Medicare and Medicaid drug pricing laws, it has introduced considerable uncertainty about the federal government's approach to healthcare affordability.
Impact of Executive Order 14087's Repeal
The now-repealed executive order had established three major initiatives: strengthening Medicare's negotiating power, supporting state-level drug cost reduction efforts, and promoting market transparency and competition. Most notably, it authorized the Center for Medicare and Medicaid Innovation to test new payment models aimed at reducing drug costs for Medicare beneficiaries.
"Executive Order 14087 called for CMS to test new, innovative methods to lower drug costs," explained Ron Lanton III, Esq, partner at Lanton Law PLLC. "HHS selected three drug payment and delivery models which included 'Medicare High-Value Drug List Model.' This model would have allowed Part D sponsors to offer a maximum co-payment of $2 for a month's supply for certain high value generics."
Current State of Drug Pricing Reform
The repeal immediately halts two key initiatives: the $2 copay program for generic medications under Medicare and reduced Medicare payments for drugs approved through the FDA's accelerated approval pathway. However, the Inflation Reduction Act's (IRA) core provisions remain in effect, including:
- $35 monthly cap on insulin costs
- $2,000 annual limit on out-of-pocket expenses for Medicare beneficiaries
- Medicare's authority to negotiate drug prices
Market Response and Price Increases
Despite ongoing reform efforts, several major pharmaceutical products have already seen price increases in early 2025, including:
- Biktarvy (Gilead Sciences)
- Ozempic (Novo Nordisk)
- Hemlibra (Genentech)
Implications for Healthcare Providers and Patients
The regulatory freeze accompanying the repeal adds another layer of complexity. For 60 days, the rulemaking process for healthcare policies is paused, allowing the Trump administration to review and potentially revise existing regulations.
"We are closely monitoring potential changes due to the [IRA]," noted Melody Chang, RPh, MBA, BCOP, vice president of pharmacy operations at American Oncology Network. "As these changes take effect, they might influence treatment decisions, particularly for patients who previously faced financial barriers to oral therapies."
Future Outlook and Challenges
Healthcare experts emphasize that while major IRA provisions remain intact, the broader direction of federal healthcare policy under the new administration remains unclear. The repeal has created ambiguity about the government's role in addressing rising prescription drug costs.
"The OIG has been weakened by administration firings and we have no idea how this will affect the exclusionary lists or current investigations," warned Lanton. He advised pharmacists to maintain vigilance with state pharmacy board regulations and DEA requirements during this period of uncertainty.
As the situation evolves, healthcare providers and patients alike await clarity on the administration's long-term strategy for managing drug costs while ensuring access to essential medications. The success of these efforts will largely depend on finding a balance between cost management and maintaining quality patient care.
