Trump Moving Healthcare Debate Away From Heavy Handed Gov't

There are many things to like about President Donald Trump's executive order on prescription drugs, which he released last month.

Paramount among them is that it moves the debate over prescription drug pricing away from price controls and other forms of heavy-handed government intervention. Instead, it aims to dismantle many government-imposed barriers that frustrate patients' ability to access state-of-the-art medicines affordably.

Take the executive order's treatment of the Medicare Drug Price Negotiation Program created by the 2022 Inflation Reduction Act. This program of price controls is easily the most disastrous bit of health policy in recent memory. It will slow the development of new medicines — and could reduce access to existing ones.

President Trump's executive order wouldn't end this program; only Congress can do that. But the EO would make the policy far less harmful in the short term by seeking to eliminate a provision sometimes known as the "pill penalty."

Under current law, chemically synthesized "small-molecule" drugs — typically pills — are subject to Medicare's price controls nine years after they garner federal approval. Medicines derived from living organisms — "biologics," as they are known — are exempt from price controls for 13 years post-approval.

The chief consequence of this "pill penalty" has been to add immense risk and uncertainty to the enterprise of developing new small-molecule drugs. Since the IRA's passage, investment in small molecule drugs has plummeted nearly 70%, according to research published in the journal Therapeutic Innovation & Regulatory Science.

The decline in research into small-molecule drugs has dire implications for patients. Pills are generally easier for patients to take than biologics. Further, small molecules have proved particularly effective at battling many deadly diseases — cancer high among them.

And now, the IRA's pill penalty seemingly guarantees that we'll get fewer new drugs.

To clean up this mess, President Trump's executive order instructs his administration to work with Congress to end the pill penalty. That's a policy goal lawmakers can act on right away by taking up the EPIC Act. The measure would ensure that small-molecule drugs and biologics are both exempt from price controls for 13 years.

The executive order also takes aim at the 340B program, which allows hospitals and clinics to buy medicines at steep discounts and then mark up the prices as they see fit. The thinking is that they'll use the extra revenue they realize to make care more affordable for low-income and uninsured patients.

But that's not how things work in practice.

Many hospitals that take advantage of the program serve relatively well-off areas. According to one recent study, nearly two-thirds of hospitals that participate in 340B provide lower-than-average levels of charity care compared to all hospitals.

Under President Trump's executive order, hospitals that abuse the program could see their 340B discounts evaporate. This wouldn't happen overnight. The order instructs the administration to conduct a study on what hospitals are paying for medicines.

But its findings could lay the groundwork for a policy that would drastically cut Medicare payments to hospitals that are abusing the 340B program to line their own pockets in the near future.

Finally, Trump's executive order promises to optimize intellectual property rights in ways that "provide access to prescription drugs at lower costs to American patients and taxpayers." In so doing, it embraces IP protections as important tools for spurring innovation and encouraging the kind of competition that keeps prices down.

That's a far cry from the position of his predecessor. Biden routinely sought to curtail pharmaceutical IP protections under the mistaken assumption that patents somehow restrict access to needed medicines.

With his new executive order, President Trump has sketched an alternative approach to prescription drug policy. According to his vision, it isn't a dearth of government meddling that has driven up drug costs and threatened innovation. The most immediate threats to drug access come from progressive market interventions that should have never been enacted to begin with.

Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy — and How to Keep It" (Encounter 2025). Follow her on X @sallypipes. Read Sally Pipes' Reports — More Here.