President Donald Trump is unlikely to completely dismantle the landmark process that enables Medicare to negotiate drug prices with manufacturers, even as he works to undo many of Joe Biden’s major policy achievements.
However, Trump is expected to introduce modifications to the negotiation process, potentially without requiring congressional approval.
“Trump is looking to nibble around the edges of the law,” said Matthew Kupferberg, a partner in Frier Levitt’s life sciences group, adding the president is “not looking to completely abandon the drug negotiation process at this point.”
The direction Trump ultimately takes remains uncertain. While some lawmakers and health policy analysts believe he could weaken the negotiations in ways that favor pharmaceutical companies, others suggest he might take a more aggressive approach to cutting costs for patients and the federal government, aiming to surpass his predecessor’s efforts.
His decision will have major consequences for the prices paid by 68 million Medicare beneficiaries in the U.S. and could significantly impact pharmaceutical companies such as Novo Nordisk, Bristol Myers Squibb, Pfizer, and Merck, whose drugs are included in the first two rounds of negotiations.
The negotiations are a key element of Biden’s Inflation Reduction Act (IRA), which seeks to lower prescription drug costs for seniors and save the government nearly $100 billion in Medicare expenditures over the next decade.
The pharmaceutical industry strongly opposes these negotiations, filing multiple lawsuits arguing that they threaten profits and hinder drug innovation.
So far, the Trump administration has provided limited details about its stance on the negotiations. In January, it emphasized a goal of achieving “greater transparency” in the ongoing second cycle and expressed openness to suggestions from external stakeholders on how to improve the process.
Obstacles to Repeal and Potential Strategic Adjustments
Repealing or significantly altering the law would be a major challenge, as it requires congressional approval. Republicans hold only a slim majority, and controlling healthcare costs is a bipartisan priority, especially in a country where prescription drug prices are two to three times higher than in other developed nations. Completely eliminating Medicare price negotiations could be an unpopular move for Trump.
Instead, his administration could modify the implementation of the law, such as by altering the government’s interpretation of the selection criteria for drugs and other regulatory aspects.
“I think it is a question of how they interpret some of the statutory language,” said Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a health policy organization.
Cubanski noted that any potential adjustments could become clearer in the coming months.
The Trump administration is set to oversee the negotiation process for the second round of 15 drugs, with newly negotiated prices taking effect in 2027.
The Biden administration selected these drugs in January, before Trump assumed office. Drug manufacturers have until the end of February to decide whether to participate in the negotiations, which they are expected to do to avoid steep financial penalties.
Potential Actions Trump Could Take
Trump has thus far signaled an interest in increasing transparency in Medicare drug price negotiations. Kupferberg suggested this could involve revealing more details about the government’s rationale for selecting certain drugs or determining price points.
During the first round of negotiations, Medicare solicited public input from patients, caregivers, and consumer groups. Kupferberg said the Trump administration might expand participation to include additional stakeholders, such as insurers or pharmacy benefit managers.
“It could be a much broader type of negotiation process,” he said.
Amy Campbell, associate dean for law and health sciences at the University of Illinois Chicago School of Law, noted that the administration could also reinterpret legal guidelines, which might influence which drugs are selected and the extent of price reductions.
For instance, the IRA mandates that drugs selected for negotiation must have been on the market for at least seven years without generic competition—or 11 years for biologic drugs, including vaccines.
Trump Medicine PolicyHowever, Trump’s administration could adopt a more flexible approach in determining whether a drug faces market competition, potentially exempting certain drugs from negotiations.
Trump might also redefine what constitutes a single drug for negotiation purposes, according to KFF’s Cubanski. Currently, different products containing the same active ingredient can be grouped as one drug, a practice opposed by the pharmaceutical industry.
For example, the Biden administration grouped three Novo Nordisk medications—Wegovy, Rybelsus, and Ozempic—under a single negotiation, as all three contain the active ingredient semaglutide. Of these, Ozempic accounts for the largest share of Medicare spending.
Adjustments to drug selection criteria could benefit pharmaceutical companies, reducing their revenue losses from price reductions.
Another key question is how assertively Medicare will negotiate under Trump. Cubanski pointed out that under the IRA, the final price for a drug cannot exceed a government-established “ceiling” price.
Trump could influence how close Medicare’s initial price offer comes to that ceiling, potentially weakening the program’s ability to secure deep discounts.
Legislative Changes Face Hurdles
Significant changes to the Medicare negotiation framework are less likely, as they would require congressional approval. One of the pharmaceutical industry’s biggest concerns is the so-called “pill penalty.”
Currently, biologics like vaccines are exempt from price negotiations for 13 years after FDA approval, while small-molecule drugs (such as pills or tablets) are only exempt for nine years. The industry argues this discrepancy discourages investment in developing small-molecule drugs, which are often more convenient for patients.
Cubanski pointed out that bipartisan legislation was introduced last year to eliminate the pill penalty. If such a bill passes Congress and reaches Trump’s desk, “I don’t see why he wouldn’t sign it,” she said.
However, broader changes to the IRA do not have the same bipartisan backing as efforts like pharmacy benefit manager (PBM) reform, said Jesse Dresser, a partner in Frier Levitt’s life sciences department.
“I could see something like [PBM reform] happening a lot sooner than I could see trying to open up the IRA and tweak it, even if it’s something that the administration might ultimately get behind,” Dresser said.
Legal Battle Still Ongoing
It remains unclear how Trump will handle the ongoing legal battle between pharmaceutical companies and the federal government over Medicare negotiations.
So far, the industry’s lawsuits—arguing that the negotiations are unconstitutional and should be halted—have been unsuccessful in court. As of January, nine lawsuits were still pending.
“Will the Trump administration continue to defend the program? Or maybe not as aggressively defend the program?” Cubanski asked. “I think those are some key questions.”
If Trump’s administration chooses not to defend the program, judges could decide on the cases without opposition from the government. However, Kupferberg believes the administration would prefer to maintain control over the process rather than allow courts to make unilateral rulings.
The Trump administration is more likely to engage in negotiations or reinterpret the law rather than let the entire program be dismantled through lawsuits.
Kupferberg added that Trump likely does not want the negotiation process to disappear entirely, as doing so would force him to propose an alternative system for Medicare drug price negotiations—something that has not yet been presented.
