Implementation of Drug Pricing EO Should Protect Innovation and IP

Reducing the price of drugs is a laudable objective.  But that must be done while promoting innovation and protecting intellectual property (IP).  President Trump’s April 15, 2025, Executive Order to lower drug prices addresses these dual objectives by noting that in his first term, he called on Congress to join the administration in creating “sustainable solutions that would promote innovation and affordable access for the long-term.”  The “policy” of the EO states that, “ … intellectual property protections” should be “optimized to provide access to prescription drugs at lower costs to American patients and taxpayers.”

The EO notes that policies like the price controls found in the Inflation Reduction Act (IRA) in the Biden administration have been counterproductive.  Citizens Against Government Waste (CAGW) has often cited the negative impact of price controls, and it is therefore not surprising that those provisions of the IRA continue to force companies to cut back on new drug research.

The EO calls for a review of the IRA’s Medicare Drug Price Negotiation Program in a manner that would “minimize any negative impacts of the maximum fair price on pharmaceutical innovation with the United States,” which ipso facto concludes the program has a negative impact on innovation.  CAGW has suggested that the only way to ensure there is no impact on research and development is to eliminate the program, but since that seems unlikely to occur, the EO at least attempts to make it less onerous. 

The EO correctly recommends eliminating the Biden “pill penalty,” which imposes price controls on small molecule drugs four years earlier than for large molecule products, by calling on Congress to work with the administration and eliminate the disparity.  Elimination of the pill penalty is a priority for a coalition of 18 organizations including the Council for Citizens Against Government Waste (CCAGW), that signed a February 28, 2025, letter to Congress supporting the inclusion of the Ensuring Pathways to Innovative Cures Act in reconciliation.

The EO also appropriately calls for accelerated approval of generics and biosimilars, which will reduce costs, but unfortunately requests that drug importation should be streamlined and improved.  CAGW has stated that drug importation is dangerous and will not lower prices, and Canada has made it clear it will not export drugs to the U.S., so it is not clear how that provision will be implemented.   

CCAGW has long been promoting reforms of the 340B Drug Pricing Program, and the EO takes several steps that would begin to restore the program’s original intent of providing drug discounts to patients rather than enriching hospitals and contract pharmacies.

CAGW is encouraged by the administration’s efforts to lower drugs costs while protecting innovation and IP and suggests that those involved in the analyses and reports established in the EO should consider the recommendations in the November 2022 issue brief, “Curing What Ails the U.S. Healthcare System.”  As the publication noted, “America’s healthcare system should promote competition and innovation and give patients more choice and control.”