President Trump Can Cut Wasteful Spending to Reduce Drug Prices and Healthcare Costs
President Trump has made lowering drug prices and reducing healthcare costs for Americans a top priority of his second term, along with encouraging more biopharmaceutical investment and innovation in the U.S. Citizens Against Government Waste suggests that he can achieve both objectives without imposing price controls, which includes Most Favored Nation (MFN) polices, reforming the 340B Drug Discount Program, and eliminating the Center for Medicare and Medicaid Innovation (CMMI).
It is abundantly clear that price controls in any industry never work and inevitably create shortages and disrupt markets. Implementing price controls by importing foreign drug prices through MFN would have disastrous effects on patients. An August 2022 University of Chicago issue brief found that price controls would increase healthcare spending by $50.8 billion over the next 20 years and lead to 135 fewer drugs, which would negatively affect the lives of 2.47 million patients. Price controls in the healthcare industry, whether through a MFN policy or price controls included in the Inflation Reduction Act, will fail to lower costs and increase access for patients and will have detrimental effects on pharmaceutical investment and innovation. CAGW made its views on MFN clear in its July 26, 2025, comments to the United States Trade Representative, and an August 20, 2020 letter to President Trump signed by 63 organizations.
Another way to reduce wasteful healthcare spending is by reforming the 340B Drug Discount Program. 340B was created in 1992 and requires that manufacturers participating in Medicaid provide a discount of 20 to 50 percent on their products to covered entities, including non-profit hospitals and federally funded health clinics. Congress has failed to define an eligible 340B patient, which has allowed the program to be used to inflate hospital and pharmacy profits rather than providing discounts to patients. According to a September 9, 2025 Congressional Budget Office (CBO) report, purchases made by hospitals participating in the 340B program increased from $6.6 billion in 2010 to $43.9 billion in 2021. The misuse of the 340B program raised Medicaid spending by $391 per enrollee, or $32 billion annually from 2014 to 2021. If the White House is looking for ways to reduce drug prices and healthcare spending, reforming 340B would be a great place to start.
The White House can also save taxpayer money by eliminating CMMI. CMMI was created in 2010 by the Affordable Care Act (ACA) and was charged with creating and testing new models to save money and improve healthcare quality in Medicare, Medicaid, and the Children’s Health Insurance Program. The CBO projected that CMMI would save $2.8 billion from 2011 to 2020 but instead it cost $5.4 billion and will cost another $1.3 billion from 2021 to 2030. Under the ACA, CMMI receives $10 billion in mandatory funding each decade, which is a burden on taxpayers that provides a negative return and has a detrimental impact on innovation and delivery or healthcare. It is clear that CMMI has failed to achieve its goals and should be eliminated.
President Trump is correct to prioritize lowering drug prices and saving money. Rather than adopting harmful policies like MFN, the administration and Congress should reject price controls, reform the 340B Drug Discount Program, and eliminate CMMI. That would be the best way to achieve the president’s goal of eliminating waste, improving efficiency, and reducing healthcare costs.
