Author: Shelby Benavidez  

Contributing Attorney: Myranda Vaughn, attorney 

It’s no secret that prescription drugs are sometimes necessary to treat chronic illnesses, fight infections, and, in many cases, save lives. However, many Americans dread a trip to the pharmacy because these medications are so expensive. Compared to other wealthy nations, Americans pay far more for the same medications. In fact, surveys show that nearly one in four Americans has difficulty affording their medications. This leaves many patients facing difficult choices: Do they feed their families, pay their bills, or fill their prescriptions? 

The cost of prescription medication has been a problem for decades. While insurance can soften the blow, millions of people, especially seniors and those with chronic diseases, still struggle with out-of-pocket expenses. Unfortunately, this often leads to skipped doses, cutting pills in half, or avoiding filling prescriptions altogether. 

In recent years, lawmakers have tried to tackle high drug costs through executive orders and new laws, especially the Inflation Reduction Act (IRA). These steps are changing how the U.S. government deals with drug prices. In this blog, we’ll explain the problem, what has been done so far, and what the IRA could mean for patients. 

Understanding Drug Pricing in America  

Why Prescription Drugs Are So Expensive in the U.S.  

The high cost of drugs in the U.S. is the result of several overlapping issues. Drug companies often point to the billions of dollars they spend on research and development as justification for high prices, arguing that innovation depends on these revenues. Patent protections also give brand-name medications a monopoly for years, preventing competition from generic alternatives. 

Unlike many other countries where the government negotiates with drug companies to set affordable prices, the U.S. has allowed companies to decide their own, for the most part. For years, Medicare, which covers millions of seniors, wasn’t allowed to negotiate prices at all. On top of that, the system includes many middlemen such as insurers, pharmacies, and wholesalers, which adds extra costs. Because of all this, Americans often pay two to three times more for the same drugs than people in countries like Canada or Germany. 

The Human Impact of High Prescription Drug Costs 

High drug prices are a heavy burden and can harm people’s health. Take insulin, for example. It has been around for over 100 years, yet in the U.S., insulin can cost hundreds of dollars per vial. Some patients try to stretch their insulin by taking less than they need, and sadly, this can lead to tragic outcomes. Seniors living on fixed incomes may pay thousands of dollars each month for treatment for cancer or other serious illnesses, forcing them to use up savings or skip treatment. 

Government Efforts to Lower Prescription Drug Prices  

Because the private market has not been able to solve the issue, public pressure has grown for government intervention. Over the years, leaders from both major political parties have proposed solutions. Some have suggested allowing the importation of cheaper medications from Canada or Europe, while others pushed for stronger competition from generics and more transparency in how prices are set. Despite the different approaches, most people seem to agree that the system is broken. Unfortunately, meaningful reform has been slow, in part because the pharmaceutical industry is one of the most powerful lobbying groups in Washington. This is where executive orders have been used, giving presidents an opportunity to act even when Congress has been gridlocked. 

Executive Orders on Drug Pricing Explained  

What Is an Executive Order?  

An executive order is a directive issued by the President to federal agencies. It can’t create new laws, but it can influence how existing laws are interpreted and enforced. In regard to drug pricing, executive orders have been used to push agencies like the Department of Health and Human Services and the Food and Drug Administration to act within their authority to get these costs down as much as possible. 

Presidential Actions to Reduce Drug Costs  

Several presidents have turned to executive orders in an attempt to reduce drug prices. President Trump, for instance, signed orders in 2020 that aimed to allow states to import cheaper drugs from Canada and to tie the price of certain U.S. drugs to lower prices paid in other countries, a policy referred to as “most favored nation.” President Biden built on these efforts in 2021 and 2022. His executive orders directed agencies to crack down on so-called “pay-for-delay” deals in which brand-name drugmakers pay generic manufacturers to stay off the market, to continue exploring safe pathways for importation, and to prepare Medicare to begin negotiating drug prices for the first time.  

The Limits of Executive Orders on Drug Prices  

While executive orders can make headlines and signal a president’s priorities, they are often limited in their effectiveness. They frequently face lawsuits from industries that stand to lose money, can be bogged down in bureaucratic hurdles, and may be reversed by the next administration. Because of these limitations, executive orders are often seen as band-aid solutions rather than long-term reform. That is why many advocates pushed for congressional action, which eventually came in the form of the Inflation Reduction Act.  

Inflation Reduction Act: What It Means for Drug Prices  

What Is the Inflation Reduction Act?  

The Inflation Reduction Act (IRA), passed in August 2022, is an umbrella law that covers climate, taxes, and healthcare. For drug prices, it’s the biggest change this country has seen in a long time. The law mainly focuses on Medicare, the health program for seniors and people with disabilities, introducing new rules to make prescription drugs more affordable. 

Who Benefits Most from the Inflation Reduction Act?  

Although the IRA does not directly apply to people with private insurance or those without insurance, experts believe that Medicare’s negotiations could influence broader pricing trends in the future. If the largest healthcare purchaser in the country is paying less, other insurers may push for similar deals. 

Key 2025 IRA Updates to Medicare Drug Costs  

The most notable feature of the IRA is that, for the first time in history, Medicare can negotiate directly with pharmaceutical companies to lower the prices of certain high-cost drugs. This is a groundbreaking shift, since Medicare covers around 65 million Americans and holds tremendous purchasing power.  

The law also places limits on how quickly drug prices can rise. If a manufacturer increases a drug’s price faster than inflation, they must pay rebates back to Medicare, discouraging historically common annual hikes. For example, the insulin cap, which was put into effect in 2023, made sure patients on Medicare wouldn’t be charged more than $35 per month for insulin. 

$2,000 Medicare Drug Cap and New Cost Smoothing 

In early 2025, several major parts of the Inflation Reduction Act have taken effect, and these updates will bring big savings for Medicare patients. 

The most important change is the $2,000 annual cap on out-of-pocket prescription drug costs under Medicare Part D. This means no one on Medicare will pay more than $2,000 a year for their medication, no matter how expensive those drugs are. For patients who currently face bills of $10,000 or more, this will be life-changing. 

Another key change is the “smoothing” program. Today, patients sometimes face huge costs all at once at the start of the year when deductibles reset. With the new smoothing option, people will be able to spread their prescription costs evenly across the year, making them more manageable. 

Finally, Medicare Part D will expand access to vaccines. Seniors will be able to get recommended vaccines, such as shingles and pneumonia shots, without paying out of pocket. 

Why the Pharmaceutical Industry Opposes the IRA  

The pharmaceutical industry has strongly opposed these changes. Companies argue that reducing their profits will lead to fewer resources for research and innovation, slowing the development of new treatments. Several lawsuits have been filed challenging the law as unconstitutional, and while the government has so far moved ahead with implementation, these legal battles could shape the scope of the law in years to come.  

The Future of Prescription Drug Pricing in the U.S.  

The changes introduced by the IRA will not happen overnight. The first set of drugs has already been selected for negotiation, and new groups will be added each year. By the end of the decade, dozens of the most expensive drugs for seniors will have negotiated prices. While the rollout is gradual, the long-term vision is clear: a system where Americans are no longer forced to pay the highest drug prices in the world simply because of where they live.  

The fight over drug prices in America has been long and difficult. Executive orders brought attention to the issue and showed what presidents could do on their own, but lasting change required congressional action. The Inflation Reduction Act represents a turning point.  

For millions of Medicare beneficiaries, relief is already arriving in the form of lower insulin prices and annual out-of-pocket caps. Over time, negotiated prices could save both patients and taxpayers billions of dollars. While the law doesn’t directly lower costs for everyone, it’s a step in the right direction.  

The bottom line is that the IRA, combined with recent executive actions, signals a shift in how the U.S. approaches drug pricing. While there’s still a lot of work to do, there’s a real pathway toward ensuring that no one has to choose between their health and their wallet.