U.S. Takes Steps to Lower Drug Prices Through Executive Order and Medicare Negotiations

The recent executive order by President Trump aimed at lowering drug prices has created uncertainty within the pharmaceutical sector due to its broad directives without specific implementation guidelines.

Market reaction to the announcement was initially negative with pharmaceutical and biotech shares dropping but later recovered as investors assessed the potential impact. The executive order signals a commitment to drug price reform but lacks concrete instructions, leaving industry stakeholders to anticipate further regulatory clarifications.

Concurrently, the U.S. Centers for Medicare and Medicaid Services (CMS) plans to release a list of 15 drugs eligible for the third round of Medicare price negotiations by early February 2026. This upcoming round will be notable for including drugs covered under Medicare Part B for the first time, expanding beyond the traditional Part D drugs.

These negotiations stem from provisions set in the Inflation Reduction Act and aim to address the costs of high-priced medications for Medicare beneficiaries. The negotiated prices from this round are scheduled to take effect starting January 1, 2028.

Additionally, CMS is actively soliciting public feedback to improve transparency and reduce compliance burdens on manufacturers participating in the price negotiation process. These developments highlight ongoing regulatory efforts to manage pharmaceutical spending through payer negotiations and policy adaptation in the evolving marketplace.