Penn’s Leonard Davis Institute of Health Economics hosted a panel on Jan. 16 to discuss the implications of the Trump administration’s drug pricing initiatives.
The event hosted four panelists who discussed drug pricing provisions set forth by the White House. Moderated by LDI Executive Director Rachel Werner, the panel examined new initiatives that built upon those from former Benjamin Franklin Presidential Professor of Practice Joe Biden's presidency.
The Inflation Reduction Act — which was initially passed in August 2022 under Biden’s administration — contained provisions to remove coinsurance for seniors, introduce inflation rebates, and establish a program for Medicare drug price negotiation.
Avik Roy, co-founder and chairman of the Foundation for Research on Equal Opportunity, said that the Inflation Reduction Act was “not efficient” because it was “not maximizing the potential value of drug price negotiation.”
He added that the Centers for Medicare & Medicaid Services should take a “projection-oriented approach” and focus its “firepower in areas where there’s monopoly pricing power.”
“Ideally, what Congress would have instructed CMS to do was to look forward and say, ‘What do you project will be the drugs that cost CMS the most money over the next ten years?’” Roy said. “Those are the kinds of drugs you want to get ahead of, and you’re not able to do that with this kind of retroactive approach.”
Roy added that “it would be nice to overhaul” the way Medicaid pays for prescription drugs.
More recently, IRA provisions that reduce costs for seniors have taken effect. In 2024, a 5% coinsurance payment was eliminated, and in 2025, the out-of-pocket catastrophic threshold was capped at $2,000 with adjustments for inflation.
Rachel Sachs, a Washington University in St. Louis professor of law, said that these initiatives are expected to cost the federal government money while assisting beneficiaries.
“We’re lowering the amount that seniors are being asked to pay out of pocket, and the intention is that this will make it easier for them to afford their medications,” Sachs said during the panel. “Utilization and spending will go up as a result of increasing the generosity of the insurance benefit.”
Panelists also named three pricing policies that the Trump administration has introduced: “most-favored nation,” international reference, and direct to consumer.
Trump has voiced concern with “global freeloading,” the idea that the United States pays more than other countries for the same drugs. In remedy, the administration “sent letters to 17 pharmaceutical companies, asking them to make a deal which would include a range of terms,” Sachs said.
“One of those terms was most-favored-nation pricing within Medicaid,” she added.
Since September 2025, 16 pharmaceutical companies have entered into MFN deals with the White House. MFN policies are not yet codified, but the Trump administration is attempting to get them passed into law through its Jan. 15 Great Healthcare Plan. The plan is centered on four initiatives — lowering drug prices, lowering insurance premiums, holding big insurance companies accountable, and maximizing price transparency.
Marta Wosińska, a senior fellow of economic studies at The Brookings Institution’s Center on Health Policy, said that MFN deals were “appealing” because they would lower drug prices before they went onto the market.
MFN “leverages the fact that others are very aggressive negotiators from the very beginning when the drug gets entered onto the market,” Wosińska explained. “It’s really interesting to see the president asking Congress to put this into law because it is such a massive change in how Congress has generally handled it — in particular Republicans. Maybe the party has changed enough to allow for this.”
The White House has also launched TrumpRx, a direct-to-consumer portal that connects patients directly with manufacturers to purchase drugs.
Wosińska raised concerns that patients could be “much worse off” if they are not “able to advance through [their] deductible by buying through TrumpRx.”
If they are not, Wosińska said, patients could “actually end up paying a lot more” than they would have initially.
Staff reporter Gabrielle Ostad covers campus politics and can be reached at ostad@dailypennsylvanian.com. At Penn, she studies Middle Eastern studies and international relations.
