16 April 2025 - Pharma just caught a break—straight from the top. President Donald Trump signed an executive order instructing Health Secretary Robert F. Kennedy Jr. to work with Congress to delay Medicare's drug pricing negotiations for small-molecule drugs (mostly pills) from 9 years to 13, bringing them in line with biologics. It's a move drugmakers have lobbied hard for—and if passed, it could lock in four more years of premium pricing power for some of the industry's biggest revenue drivers.
But that's not all. The order also pushes for “site-neutral” payment reform—meaning Medicare would start reimbursing the same rates whether a drug is administered in a hospital or outpatient clinic. That alone could slash reimbursement discrepancies by up to 35%. Plus, the FDA's been directed to ramp up approvals of generics and biosimilars, and expand state drug importation programs. So far only Florida's been approved, but more are in the pipeline. Together, these policies could shake up supply chains and change where, how, and how much Americans pay for medicine.
Investors should also keep an eye on the next batch of 15 drugs heading into Medicare negotiations. That list includes Novo Nordisk's (NVO, Financial) Ozempic and Wegovy, and Pfizer's (PFE, Financial) Ibrance and Xtandi. Trump's push to delay the clock could blunt the impact on revenue forecasts and push pricing risk further out. Bottom line? If you're holding pharma, this order doesn't just buy the industry time—it might just buy it a second wind.
