The sweeping Republican policy bill that awaits President Trump’s signature on Friday includes a little-noticed victory for the drug industry.
The legislation allows more medications to be exempt from Medicare’s price negotiation program, which was created to lower the government’s drug spending. Now, manufacturers will be able to keep those prices higher.
The change will cut into the government’s savings from the negotiation program by nearly $5 billion over a decade, according to an estimate by the nonpartisan Congressional Budget Office.
“This is essentially giving $5 billion back to the pharmaceutical industry,” said Dr. Benjamin Rome, a health policy researcher at Brigham and Women’s Hospital in Boston. “It’s done in a way that is designed, on its face, to solve the problem of some misaligned incentives, but I don’t think it solves those problems.”
Under existing law, costly drugs are exempt from price negotiations if they are approved to treat a single rare disease — one that affects fewer than 200,000 Americans. Drugmakers have complained that this policy discourages them from running studies and seeking approval to treat a second rare disease, and that it ultimately deprives patients of new treatments.
In response, the new bill spares drugs that are approved to treat multiple rare diseases. They can still be subject to price negotiations later if they are approved for larger groups of patients, though the change delays those lower prices.
This is the most significant change to the Medicare negotiation program since it was created in 2022 by Democrats in Congress. In signing the new bill, Mr. Trump will weaken the program at a time when he is calling for even more drastic cuts to align drug prices in the United States with those in other wealthy countries. Mr. Trump has put forward no real policy for achieving that goal.
Lower prices will go into effect next year for drugs that were part of the first round of negotiations. The Trump administration is now overseeing the second round, for price cuts that will take effect in 2027. Among the drugs picked for negotiation is the blockbuster weight-loss medication sold as Ozempic and Wegovy.
The new exemptions will apply to the third round, affecting prices starting in 2028. Had the new rules been in place earlier, several drugs that are currently up for price cuts would have been spared, including Imbruvica and Pomalyst, which treat rare forms of cancer.
For years, the government has dangled incentives to encourage drugmakers to develop medications for rare diseases. This was meant to help offset the financial risk of investing in treatments for relatively few patients.
But rare diseases have become a gold mine for the pharmaceutical industry, and the Republican bill helps to preserve that. Many successful drugs, especially those for cancer, were initially approved for rare diseases before later becoming blockbusters that treat much larger groups of patients. And even treating rare diseases alone can be lucrative: One recent analysis found that such drugs accounted for one-fifth of the top-selling medications in the United States.
Rebecca Robbins is a Times reporter covering the pharmaceutical industry. She has been reporting on health and medicine since 2015.
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