President Donald Trump is expected to sign an executive order soon to lower the cost of prescription drugs for Medicare beneficiaries.
The order would implement a “most favored nation” policy, tying the prices of certain Medicare-covered drugs to those paid by other developed countries.
The goal: bring U.S. prices more in line with international norms by leveraging the administration’s executive authority.
For the 53 million people enrolled in Medicare Part D—out of the 67.3 million total Medicare beneficiaries—this move could offer meaningful relief from high out-of-pocket drug costs.
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U.S. prescription drug prices in 2022 were nearly three times higher than those in 33 other developed countries, and brand-name drugs cost over four times more and more than three times higher after rebates, according to 2024 RAND Corporation report for the Department of Health and Human Services (HHS).
And KFF showed U.S. per capita drug spending was more than double that of comparable countries, $1,126 vs. $552, according to 2019 data.
Trump’s “most favored nation” policy aims to cut drug costs, aligning U.S. prices with global norms. Relief for 53M Medicare Part D beneficiaries?
A Medicare battle years in the making
During his first term, President Trump pushed a similar plan to cut prescription drug costs, but a federal judge blocked the effort before it could take effect.
“People may have forgotten that President Trump initiated the ‘American Patients First’ blueprint in May of 2018, which aimed to lower drug prices and reduce out of pocket costs for Americans,” says Diane Daniels, founder of Medicare Nation. “In 2020, Trump rolled out the ‘Senior Savings Model,’ the pilot program where a set of formulary insulins were set at a maximum $35 copayment per month’s supply.”
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According to Daniels, Medicare Advantage plans and stand-alone prescription drug plans offered the Senior Savings Model in January 2021, with five pharmaceutical manufacturers participating.
Daniels said that the model has been instrumental in laying the groundwork for implementing the Inflation Reduction Act of 2022, which allowed HHS to negotiate with drug manufacturers.
If enacted, President Trump’s executive order could mark another significant turn in Medicare drug pricing policy, adding to federal efforts to control prescription costs. The IRA set the stage, requiring the HHS Secretary to negotiate prices for select high-cost drugs.
In fact, Medicare has already negotiated lower prices for 10 prescription drugs under the IRA. These drugs are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, and Imbruvica. “Starting in January of 2026, 10 Medicare Part D negotiated prescription medications are set to offer beneficiaries a 38%-79% discount on these medications,” said Daniels.
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The IRA also introduced a $2,000 annual cap on out-of-pocket costs beginning in 2025; eliminated the 5% coinsurance requirement in the catastrophic phase starting in 2024; and capped monthly insulin costs.
These reforms were expected to benefit beneficiaries with the highest drug costs—typically older adults with multiple chronic conditions.
According to AARP, nearly 75% of those who will benefit from the $2,000 cap are between the ages of 65 and 84, with 45.6% between 75 and 84 and 29.8% between 65 and 74.
“Beginning this, persons with Medicare Part D plans have a $2,000 annual cap on out-of-pocket costs for covered medications,” said Tom Clark, a Social Security and Medicare consultant. “As long as they pick a Part D plan that covers all their medications, they are already fairly well protected against high drug costs.”
These reforms were expected to benefit beneficiaries with the highest drug costs, typically older adults with multiple chronic conditions.
Nearly 75% of those who will benefit from the $2,000 cap fall between the ages of 65 and 84, with 45.6% between 75 and 84 and 29.8% between 65 and 74, according to AARP.
Related: Medicare recipients face a growing problem
While numerous studies have shed light on out-of-pocket drug costs, much of the data predates the full rollout of the IRA. For instance, an Employee Benefit Research Institute study published in 2016 showed the following:
For single households, average biennial out-of-pocket prescription drug costs were
$1,721 for ages 65-74,$1,763 for ages 75-84, and$1,846 for ages 85 and older.
For couple households, these figures were
$3,233 (65-74),$3,156 (75-84), and$3,442 (85+).
What this Medicare change means for you
The potential implementation of the “most favored nation” approach could have far-reaching implications for Medicare beneficiaries.
Not surprisingly, the pharmaceutical industry has historically opposed such pricing reforms while consumer advocates argue that this pricing policy could lower costs for some of Medicare’s priciest drugs.
“Trump’s executive order will expand access to lower cost drugs imported from outside of the country, which has predominantly been a ball of red tape,” said Daniels. “How the executive order will work alongside current tariffs is another issue.”
She also said that Medicare Advantage carriers have not responded well to the current Medicare Part D $2,000 maximum out-of-pocket cost for Medicare beneficiaries.
“Many Medicare Advantage Plan carriers, looking to regain lost profit, reduced non-Medicare benefits like dental, eyeglass allowance and hearing aid allowances,” said Daniels. “Some carriers introduced ‘medical deductibles’ in their plans, moved some Part D medications to higher tiers and increased monthly premiums on certain Medicare Advantage plans.”
Tom Wright, President of The Turning 65 Workshop, offers a more measured assessment: “From a ‘big picture’ perspective there’s a large divide between the majority of retirees for whom this will not likely be of any consequence in the near term (if at all), and a much smaller subset of those who take a medication(s) that might be directly impacted in a material way.”
Wright cautions against premature action.
“For that smaller subset of retirees, since the executive order has yet to be issued – and pharmaceutical companies have yet to respond – it’s premature to initiate any kind of research into alternatives,” he said. “Given the likely extended timeline of any implementation, I would simply advise retirees who have significant Medicare prescription needs to be aware of this issue and that there may eventually be a need to re-evaluate their drug plan choice… something they should normally do on an annual basis anyway.”
Here’s what Medicare beneficiaries should consider:
Stay informed: Pay attention to announcements from the administration and Medicare about potential changes to drug pricing that could affect your medications.Review your coverage: Review your current Medicare prescription drug coverage (Part D) and understand which of your medications have restrictions or high copays.Consult healthcare providers: Daniels recommends that Medicare beneficiaries should bring a copy of their ‘drug formulary’ to doctor appointments. “This allows doctors to look up classification of drugs and discuss options more favorably with patients,” she said.Wait for details: Wright suggests that any future changes will be communicated in detail to Medicare drug plan members when the time eventually comes. “With all the anxiety and uncertainty happening in the world, there’s currently no need for an issue like this to add to a retiree’s stress level,” said Wright.Consider Medicare plan choices: During the next Medicare annual election period, the impact of this policy might influence which plan offers the best coverage for your needs.
