Trump Signs Executive Order Impacting Medicare Drug Pricing and Site-Neutral Payments

On April 15, 2025, President Donald Trump signed a healthcare executive order directing the Department of Health and Human Services (HHS) to work with Congress to amend a key Medicare drug pricing policy. The order supports a pharmaceutical industry-backed proposal to delay price negotiation eligibility for small molecule drugs—mainly pills—by four years, aligning them with the 13-year waiting period for complex biologics. Currently, small molecule drugs are eligible after nine years. This proposed change is intended to enhance industry innovation, which drugmakers claim is threatened by earlier negotiations allowed under President Joe Biden’s Inflation Reduction Act.​Reuters

The order also seeks broader healthcare reforms, including aligning Medicare drug payments with typically lower hospital rates and standardizing patient costs regardless of care location, dubbed site-neutral payments. Additionally, Trump instructed the FDA to streamline processes for approving generic and biosimilar drugs and to facilitate state drug importation programs. Florida remains the only state authorized to import drugs from Canada, although others have applied. Meanwhile, the Trump administration is set to conduct the next round of Medicare drug price negotiations, targeting 15 high-cost drugs including Ozempic, Wegovy, Ibrance, and Xtandi.​