President Donald Trump signed an executive order to potentially modify the Medicare Drug Price Negotiation Program, initiated by the Biden administration. This order could extend the eligibility for small molecule drugs for negotiations by four years, aligning their treatment with that of biological products, which traditionally have a longer timeline. The changes aim to address concerns from pharmaceutical companies about the 'pill penalty' which they believe hampers investment in drug development. The first set of negotiated drug prices will roll out in 2026 and 2027 for selected drugs.
Pharmaceutical companies have referred to small molecule drugs' shorter timeframe for selection as a "pill penalty," arguing that it could reduce incentives to invest in their development.
The negotiation program was introduced by the Biden administration via the Inflation Reduction Act, allowing the federal government to negotiate expensive Medicare Part D drug prices directly.
President Donald Trump signed an executive order directing modifications to the Medicare Drug Price Negotiation Program to align the treatment of small molecule drugs with biological products.
Currently, drugs can only be selected for negotiation if they are brand-name or biological products without generic or biosimilar equivalents.
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