LUGPA Policy Alert: Executive Order Outlines Trump Administration's Drug Pricing Agenda

April 2025 

On April 15, President Trump issued a new Executive Order (EO) presenting a comprehensive strategy to lower prescription drug prices. The EO outlines a mix of legislative proposals, regulatory directives, and requests for administrative recommendations—several of which could directly impact Medicare reimbursement, the 340B program, and site-of-service payment policy.

The most notable section in the EO includes the following provision that addresses site neutrality:

“Sec. 11.  Reducing Costly Care for Seniors.  Within 180 days of the date of this order, the Secretary shall evaluate and, if appropriate and consistent with applicable law, propose regulations to ensure that payment within the Medicare program is not encouraging a shift in drug administration volume away from less costly physician office settings to more expensive hospital outpatient departments.”

Key Proposals with Potential Practice Impact

• Extending the Medicare Drug Price Negotiation Window for Small Molecules
  The EO calls for small-molecule drugs to receive the same 13-year delay before Medicare price negotiation as biologics, up from the current 9 years. This change could incentivize continued investment in innovative therapies, but would require cost offsets due to an estimated $9–13 billion price tag.
• Lowering Medicare Payments for Outpatient Drugs in Hospitals
  The EO revives proposals to cut Medicare payments to hospitals for drugs acquired at 340B discounts by aligning reimbursement with acquisition costs. It also endorses site-neutral payment reform for outpatient drugs, potentially paying hospital outpatient departments the lower physician office rate. These changes would shift incentives and help level the playing field between independent and hospital-owned practices.
• Requiring 340B Discounts to Benefit Patients at Community Health Centers
  Under this proposal, community health centers would be required to pass 340B savings on insulin and epinephrine directly to patients with high cost-sharing or no insurance. This mirrors a prior Trump-era rule that was rescinded by the Biden Administration.

Administrative Actions and Directives

• Development of a New Medicare Payment Model for High-Cost Drugs
  HHS is directed to create a payment model focused on achieving better value for high-cost drugs not subject to negotiation. This initiative could echo earlier proposals such as international reference pricing or value-based contracting.
• PBM Fee Transparency Regulations
  The EO instructs the Department of Labor to draft regulations increasing transparency into pharmacy benefit manager (PBM) fees—a move that could fragment momentum for broader PBM reform in Congress.
• Revised Guidance for Medicare Drug Negotiation
  HHS is directed to issue updated guidance for the Inflation Reduction Act’s drug negotiation program, although the EO provides few specifics.
• Expanding Drug Importation Pathways
  The EO calls on HHS to streamline and improve drug importation, potentially reviving efforts to allow access to Canadian drug markets.

Requests for Studies and Recommendations

• Medicare Part D Premium Relief
  HHS is asked to identify strategies to stabilize or lower Part D premiums, responding to concerns that IRA changes have increased beneficiary costs.
• Modernizing the Medicaid Drug Rebate Program
  The EO asks for recommendations to reform the rebate program, signaling potential shifts in how Medicaid negotiates or structures drug pricing.
• Reevaluating PBMs and Group Purchasing Organizations
  The EO seeks recommendations to address the influence of “middlemen” in the drug supply chain, without specifying immediate rulemaking.
• Accelerating Access to Generics and OTC Drugs
  HHS is tasked with proposing ways to speed FDA approval for generics and reclassify appropriate prescription drugs as over-the-counter.
• Curbing Anti-Competitive Behavior
  Federal agencies are instructed to hold public listening sessions and report on strategies for reducing drug manufacturers' anti-competitive practices.

LUGPA’s Takeaway

This Executive Order reflects a renewed push for drug pricing reform. Several provisions align with LUGPA’s longstanding advocacy for site-neutral payments, 340B transparency, and preserving access to affordable therapies.

The emphasis on administrative action also signals that some changes could advance without Congressional approval. LUGPA will continue to monitor implementation efforts and engage with policymakers to ensure reforms support independent physician practices and protect patient access to care.

The complete EO can be accessed here.