Could Prescription Drug Costs Change for Medicare Users? Experts Weigh In
By Jasmine Laws
As President Donald Trump signed an executive order Monday that promises to drastically lower prescription drug prices in the U.S., Newsweek spoke with experts to find out what the new order will mean for those on Medicare.
The executive order is aimed at a long-standing issue: Americans pay significantly more for prescription medications than consumers elsewhere, with branded drugs in the U.S. costing around three times more than those in other countries.
Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health, told Newsweek: "Our published research shows that Americans pay on average three to four times more for brand name drugs than what people in other industrialized countries pay and for some brand name drugs it is 100 times more."
The Trump administration said it would lower drug costs by tying them to the lowest price paid by any country in the world. The president said in a Truth Social post that the U.S. would no longer pay more than "the Nation that pays the lowest price anywhere in the World."
The order could therefore reduce the costs of drugs used by millions of Americans on Medicare. However, whether the change in cost reaches Medicare recipients is another thing. Here's what the experts said.
Prescription Drugs
Americans pay significantly more for prescription medications than consumers elsewhere, with branded drugs in the U.S. costing around three times more than those in other countries. Robert F. Bukaty/AP
Who Could See Drop In Drug Costs Under Medicare?
Americans who use Medicare Plan B drugs could see a drop in cost, Minal R. Patel, a professor at the School of Public Health, University of Michigan, told Newsweek.
This depends on whether the Trump administration revives a version of the 2020 Most Favored Nation policy proposal, Patel added, a policy that Trump's first administration previously tried and failed to implement following legal challenges.
Trump said in a Truth Social post on Sunday that he would be instituting the policy.
The revival of the policy "would mean Medicare Part B payments for certain high-cost drugs are capped based on the lowest prices paid by other wealthy countries, which is typically much lower," Patel said.
While this could lower drug costs for about 4 million Medicare beneficiaries who use Part B drugs, she added that "it wouldn't affect most people on Medicare or anyone with Part D, employer, Medicaid, or marketplace coverage."
The affected drugs would likely be "typically physician-administered treatments for serious conditions like cancer, rheumatoid arthritis, or macular degeneration," Patel said, adding that these are high-cost medications used by about 7 percent of Medicare beneficiaries.
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"Drugs filled at retail pharmacies under Medicare Part D, like insulin or blood pressure medications, would not be included," she said.
How Significant Will Change In Drug Costs Be?
Citing RAND's 2024 report, Jean Bae, a professor at the School of Global Public Health, New York University, told Newsweek that U.S. drug gross prices were on average 278 percent more expensive than the prices in the 33 other Organization for Economic Co-operation and Development (OECD) countries.
"Given that fact, this policy has a potential to substantially lower U.S. brand-name drug prices covered by Part B," Bae said.
However, she added, this assumes that drug companies don't try to "game the system."
Drug companies could limit the impact of the order for recipients by delaying the launch of a new expensive drug in referenced countries or pulling out of such countries altogether, Bae said.
Medicare Part B also only covers drugs that are administered in a physician's office or hospital, rather than taken at home, so differences in cost seen by those on the Medicare program could be marginal.
Bae also pointed to a study by Avelere, which found that less than 1 percent of seniors would have seen reduced out-of-pocket costs as a result of Trump's first-term rule, on which the new order appears to be based.
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