Trump admin payment tests aim to lower Medicare drug prices

The Trump administration on Friday proposed two new programs aimed at saving Medicare billions of dollars on seniors' drugs by pegging what the government pays to prices in other developed countries.

Why it matters: While President Trump's deals with drugmakers have focused primarily on getting Medicaid and direct-to-consumer drug prices in line with peer countries, the new efforts focus on Medicare.

• But the programs still could wind up increasing seniors' prescription drug costs.

The big picture: One program aimed at prescription drugs could save $14.1 billion while a second for outpatient drugs could save Medicare $11.9 billion.

• Medicare enrollees should save $6.2 billion in out-of-pocket spending for outpatient drugs from 2026 to 2031, Medicare administrators predicted.
• But seniors still could see an estimated $3.6 billion increase in prescription drug costs between 2028 and 2033.
• That's because officials anticipate the new effort will incentivize pharmaceutical companies with drugs chosen for the separate Medicare price negotiations to broker higher prices, presumably to offset losses from the pilots.

How it works: Drugmakers in both of the new programs would pay rebates to the federal government if they charge more than an international benchmark based on what other comparable countries pay.

• Enrollee out-of-pocket costs for outpatient drugs in the program would also be tied to the international benchmark.
• The benchmarks would be calculated based on either international pricing information submitted by drugmakers or available information on drug prices in other developed countries.

The Global Benchmark for Efficient Drug Pricing Model would apply to drugs paid for by Medicare Part B and delivered primarily in a doctor's office or outpatient department.

• It would include antigout drugs, medications for metabolic bone disease and for central nervous system conditions, immunological drugs, ophthalmic drugs and blood products.
• The model would start Oct. 1, 2026, and run through 2031.

The Guarding U.S. Medicare Against Rising Drug Costs Model will apply to prescription drugs paid for by Medicare Part D, including analgesics, antidepressants, blood glucose regulators, migraine medications and drugs for gastrointestinal issues.

• GUARD excludes generic drugs and biosimilars.
• It would run Jan. 1, 2027, through Dec. 31, 2031.

Both programs would exclude drugs that already have been selected for Medicare price negotiations.

What they're saying: The pharmaceutical industry bashed the proposed programs.

• "Government policies that mandate broad-based foreign price controls are bad for American patients and undermine U.S. leadership," Robby Zirkelbach, PhRMA's chief public affairs officer, said in a statement.
• "By CMS' own admission, the proposed policies are projected to increase costs for America's seniors, and they will siphon billions from U.S. medicine R&D at a time when China is on the verge of surpassing us," he added.

The proposals are open for public comment until Feb. 23.

Editor's note: This story has been corrected to reflect that the estimated savings of $14.1 billion pertain to prescription (not outpatient) drugs, the $11.9 million savings pertain to outpatient (not inpatient) drugs, and the $6.2 million savings in out-of-pockets expenses pertain to outpatient (not inpatient)  drugs.