What’s Next for Medicare Negotiated Drug Prices Under the Trump Administration?

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Just before passing the torch to the Trump Administration, the Biden Administration released the list of 15 additional drugs that will be subject to negotiated Medicare prices in 2027. The Inflation Reduction Act directs the Secretary of the U.S. Department of Health and Human Services (HHS) to negotiate Medicare prices with drug companies. The law directs the federal government to identify the list of drugs that are subject to negotiations based on total Medicare spending and other criteria. According to the Biden Administration, Medicare beneficiaries will save $1.5 billion when these negotiated prices take effect in 2026, the first year of implementation, and Medicare would have saved $6 billion if negotiated prices were in effect in 2023. 

It is now up to the Trump Administration to administer the Medicare negotiations program and potentially advance other proposals to lower drug costs. During his first term, President Trump channeled public outrage over drug prices and number of policies to make prescription drugs more affordable though most were never implemented. For example, President Trump proposed to establish a “most favored nation” system of international reference prices for selected drugs and proposed to require drug companies to disclose drug prices in television ads, neither of which were implemented, but both reflect a concern about drug prices.

The Trump Administration could go in one of three directions with the Medicare negotiations program: stay the course, water it down or repeal it all together. There are potential tradeoffs with each, but the first would be most popular. One approach would be for the Administration to double down on negotiated drug prices, recognizing the consistently strong public support for policies that help lower drug costs, including negotiated prices. KFF’s latest poll finds bipartisan support for expanding the number of drugs to be negotiated by the federal government, and weak support for any effort to repeal the Medicare negotiations program.

A second approach would be to lean into drug industry opposition, for example, by not defending the law as it faces numerous constitutional challenges in the courts or by writing rules that would exempt additional drugs from the negotiations process.

The third option would be for the incoming Administration and new Congress to try to repeal the Medicare negotiations program, though doing so could come at a cost in the court of public opinion and could result in higher Medicare spending and higher drug costs for people with Medicare.