Reversal of Executive Order 14087 Raises Questions About Future Drug Pricing Reforms

On his first day in office, President Donald Trump repealed Executive Order 14087, a measure from the Biden administration aimed at reducing prescription drug costs and increasing access to innovative cell and gene therapies for Medicaid recipients. Although the reversal did not immediately alter existing laws and regulations for Medicare and Medicaid prescription drug pricing, it has introduced uncertainty about the federal government’s strategy to address these critical issues and sparked widespread debate about the future of health care affordability in the United States.¹

Benjamin Franklin on US dollar surrounded by pills | Image Credit: © Cagkan - stock.adobe.com

What Was Executive Order 14087?

Executive Order 14087, titled "Lowering Prescription Drug Costs for Americans," was signed by former President Joseph R. Biden, Jr, on October 30, 2023. The order outlined measures to reduce prescription drug costs and improve patient access to affordable treatments.²

“Too many Americans face challenges paying for prescription drugs,” said Former President Biden, in the written executive order. “On average, Americans pay 2 to 3 times as much as people in other countries for prescription drugs, and 1 in 4 Americans who take prescription drugs struggle to afford their medications. Nearly 3 in 10 American adults who take prescription drugs say that they have skipped doses, cut pills in half, or not filled prescriptions due to cost.”²

The order consisted of 3 main initiatives²:

1. Strengthening Medicare's Negotiating Power: It directed the Center for Medicare and Medicaid Innovation within the Department of Health and Human Services (HHS) to test new payment and delivery models aimed at reducing drug costs for Medicare beneficiaries. This built upon the Inflation Reduction Act (IRA), which allowed Medicare to negotiate drug prices for the first time. Examples of potential models included value-based pricing strategies, where drug costs would be tied to clinical outcomes, and subscription-based payment models, often referred to as the "Netflix model," which allow unlimited patient access to certain drugs for a fixed fee.
2. Supporting State and Local Efforts: It encouraged federal support for state, county, and municipal initiatives to reduce drug costs, including importation programs, transparency measures, and the establishment of local bulk purchasing agreements to negotiate lower prices directly with manufacturers. States like Florida and Colorado had begun exploring drug importation programs prior to the order.
3. Promoting Transparency and Competition: The order sought to curb anti-competitive practices, such as pay-for-delay agreements—in which brand-name drug manufacturers pay generic competitors to delay entering the market—and foster greater availability of lower-cost generic and biosimilar drugs. This initiative also sought to expedite the approval process for generics and biosimilars at the FDA.

The repeal has not only halted these initiatives but has also raised questions about the new administration’s strategies to addressing high prescription drug costs. However, experts note that many of these initiatives were still in developmental stages, leaving their potential for implementation uncertain.¹

The IRA, signed into law in 2022, also plays a pivotal role in this ongoing debate. By enabling Medicare to negotiate drug prices for the first time, the IRA seeks to lower the financial burden on beneficiaries and curb pharmaceutical price increases. The law also introduces penalties for drug manufacturers who raise prices above inflation rates, further influencing the dynamics of drug pricing.²

"With the IRA imposing penalties on pharmaceutical manufacturers that increase prices above inflation rates, they could see additional cash flow constraints from fixed reimbursement rates,” explained Judith Alberto, MHA, RPh, BCOP, director of clinical initiatives at Community Oncology Alliance; Yen Nguyen, PharmD, executive director of pharmacy at Oncology Consultants; and Jonas Congelli, RPh, chief strategy officer at Hematology/Oncology Associates of CNY, in an article in Pharmacy Times^®.

“There is also the concern that MFP [maximum fair price] drugs could potentially be excluded from PBM [pharmacy benefit manager] formularies. While the out-of-pocket capping and Medicare prescription payment program is a win for patients, it will require additional support and education and increased administrative burden, workload, and operational costs."

As the IRA intersects with measures like Executive Order 14087, its broader impact on the pharmaceutical landscape remains a key point of discussion.

What Does the Reversal Mean?

The repeal of Executive Order 14087, along with the associated regulatory freeze, has created significant uncertainty around federal efforts to reduce prescription drug costs. Although the reversal does not immediately impact established law such as the IRA, which caps insulin costs at $35 per month and limits annual out-of-pocket expenses to $2000 for Medicare beneficiaries, it does halt 2 key initiatives aimed at improving drug affordability.¹

2025 Medicare guidelines pamphlet | Image Credit: © Rix Pix - stock.adobe.com

One initiative was a flat $2 copay for generic medications under Medicare, a program intended to improve medication adherence among seniors. The second initiative reduced Medicare’s payments for drugs approved under the FDA’s accelerated approval pathway, which allows medications to enter the market based on surrogate end points rather than full clinical efficacy. This program sought to encourage manufacturers to complete traditional FDA approval processes before launching therapies.¹

The accelerated approval pathway itself has faced scrutiny for years, with critics pointing to concerns such as reliance on surrogate end points, approvals despite internal objections, and insufficient follow-up studies to confirm clinical benefit. A report from the Office of Inspector General raised issues about transparency and procedural safeguards, further fueling debates about the pathway’s effectiveness in balancing innovation with patient safety.³

The regulatory freeze accompanying the repeal adds an additional layer of uncertainty. For 60 days, the rulemaking process for health care policies is paused, giving the Trump administration time to review and potentially revise or discard regulations from the prior administration. During this period, it remains unclear how the administration will proceed with drug pricing reforms, including whether it will maintain, expand, or scale back Medicare’s newfound authority to negotiate drug prices under the IRA.⁴

"We are closely monitoring potential changes due to the [IRA],” said Melody Chang, RPh, MBA, BCOP, vice president of pharmacy operations, American Oncology Network, in an interview with Pharmacy Times. “As these changes take effect, they might influence treatment decisions, particularly for patients who previously faced financial barriers to oral therapies."

Health care experts have noted that while major IRA provisions remain unaffected, the broader direction of federal health care policy under the new administration is uncertain. For now, the repeal has introduced ambiguity about the federal government’s role in addressing rising prescription drug costs, leaving patients, health care providers, and policymakers awaiting further clarity on the administration’s long-term plans.

What Are the Implications for Prescription Drug Costs?

The financial burden of prescription drugs has significant consequences for patients, who often delay therapies or cease use of medications due to high out-of-pocket costs. The IRA, signed into law on August 16, 2022, has played a crucial role in driving down drug costs.²

While the IRA’s key provisions remain intact, the future of Medicare’s drug price negotiation process under Trump’s administration is uncertain. The new administration could decide to prioritize less aggressive negotiations, potentially limiting the scope of future cost reductions. Reversal of the executive order will not affect the recent caps on insulin and out-of-pocket costs, and it remains uncertain how the president will approach changes to the IRA.¹

As of January 2025, the HHS, through the Centers for Medicare & Medicaid Services, announced the 15 additional drugs for price negotiations under Medicare Part D. As per the IRA, the negotiations with the manufacturers of the 15 drugs will occur in 2025, with the negotiated prices going into effect in 2027. However, other drugs, such as Biktarvy (Gilead Sciences, Inc), Ozempic (Novo Nordisk), and Hemlibra (Genentech) have already seen price increases since the beginning of 2025. It remains unclear how these efforts will proceed or how the administration will approach broader drug pricing reforms.^5,6

Pharmacist handling transaction with patient | Image Credit: © Syda Productions - stock.adobe.com

What Should Pharmacists Expect?

The current state of prescription drug pricing remains a complex and evolving issue, with significant uncertainty surrounding federal policy changes. The repeal of Executive Order 14087, along with the pause on regulatory action under the new administration, has left many questions unanswered about the future direction of drug affordability efforts. While the IRA continues to play a crucial role by enabling Medicare to negotiate drug prices, the broader implications of these changes are still unclear.

Amid this uncertainty, pharmacists are positioned at the forefront of supporting patients through these changes. They will play a critical role in educating patients about cost-saving programs and advocating for medication adherence, especially for high-cost therapies like insulin and cell and gene therapies. However, while the IRA offers potential benefits, including price negotiations and caps on out-of-pocket costs, its full impact will take time to unfold. The anticipated price reductions for Medicare-negotiated drugs in 2027 could significantly alter prescribing patterns and access to essential therapies.

As federal policies continue to shift, pharmacists must remain informed and prepared to navigate the changing landscape, ensuring patients have the necessary support to access medications. In an environment where drug pricing remains a key issue, the collaboration between pharmacists, policymakers, and healthcare organizations will be vital to mitigate financial barriers and ensure equitable access to care. As we look ahead, the evolving regulatory landscape will require flexibility and continued advocacy to balance cost management with patient needs.

REFERENCES

1. Trump reverses Biden policies on drug pricing and Obamacare. NBC News. January 21, 2025. Accessed January 22, 2025. https://www.nbcnews.com/health/health-news/trump-reverses-biden-policies-drug-pricing-obamacare-rcna188555

2. Executive Order 14087—Lowering Prescription Drug Costs for Americans. The American Presidency Project. October 14, 2022. Accessed January 22, 2025. https://www.presidency.ucsb.edu/documents/executive-order-14087-lowering-prescription-drug-costs-for-americans

3. FDA’s accelerated approval pathway under scrutiny for key drug approvals. Pharmacy Times. January 17, 2025. Accessed January 22, 2025. https://www.pharmacytimes.com/view/fda-s-accelerated-approval-pathway-under-scrutiny-for-key-drug-approvals

4. What Trump's first day orders mean for healthcare: ditched drug models, pauses on rules and hiring. Fierce Healthcare. January 21, 2025. Accessed January 22, 2025. https://www.fiercehealthcare.com/regulatory/what-trumps-first-day-orders-mean-healthcare-ditched-drug-models-pauses-rules-and-hiring

5. HHS announces next 15 drugs for Medicare Part D price negotiations. Pharmacy Times. January 17, 2025. Accessed January 22, 2025. https://www.pharmacytimes.com/view/hhs-announces-next-15-drugs-for-medicare-part-d-price-negotiations

6. Ozempic, Biktarvy among the drugs seeing list price increases at the start of 2025. Pharmacy Times. January 21, 2025. Accessed January 22, 2025. https://www.pharmacytimes.com/view/ozempic-biktarvy-among-the-drugs-seeing-list-price-increases-at-the-start-of-2025