Trump nixes Biden’s Executive Order on drug pricing

New president says repeal is first of “many steps the US federal government will take to repair our institutions and our economy” | Defunct order aimed to lower drug costs and place caps on essential medications | Big Pharma argues higher drug prices are necessary to fund R&D for new therapies.

On the day of his inauguration, President Donald Trump revoked an executive order issued by the Biden administration aimed at lowering the cost of prescription drugs throughout the US.

The move, part of a raft of executive actions issued on Trump’s first day in office yesterday, January 20, marks a significant shift in US drug pricing policy.

The president criticised the previous administration, arguing that “it has embedded deeply unpopular, inflationary, illegal and radical practices within every agency and office of the federal government”.

He described the repeal of Executive Order 14087 (Lowering Prescription Drug Costs for Americans) as the first of “many steps the US federal government will take to repair our institutions and our economy”.

Biden’s now-defunct executive order had included initiatives to lower prescription drug costs, such as granting Medicare the authority to negotiate prices for certain high-cost drugs, as well as introducing price caps for essential medications such as insulin.

However, with the repeal, pharmaceutical companies now find themselves with greater freedom to maintain profit margins in the face of rising healthcare costs.

Pharmaceutical companies have consistently argued that higher drug prices are necessary to fund research and development (R&D) for new therapies.

With the rollback of Biden’s price-reduction initiatives, US drug manufacturers could see increased profitability, which could be potentially reinvested into the development of innovative treatments.

One key aspect of Biden’s order aimed to reduce the influence of pharmacy benefit managers (PBMs) in the drug pricing process, while also introducing measures for greater transparency regarding drug rebates.

However, following Trump’s revocation, PBMs are expected to continue playing a central role in negotiations between pharmaceutical companies and insurers.

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