Will the new medicare drug price order make a difference in older adults' wallets? U-M expert says it's unlikely

A. Mark Fendrick, M.D., director of the university of Michigan center for value-based insurance design (VBID), is available to comment on the new executive order regarding drug prices issued may 12, 2025, by the white house.

The following can be attributed to Dr. Fendrick, who is a longtime researcher on insurance and health policy topics affecting the out-of-pocket costs that individuals pay for care and medications:

"Americans are certainly frustrated after hearing repeatedly that we pay much higher prices for branded drugs than what's paid by those who live in other developed countries. In response, president trump has just announced that the prices paid by the Medicare program for drugs will be tied to prices paid by other countries.

While this approach, known as 'most favored nation' policy, sounds appealing and simple in concept, it would be extremely challenging to implement due to the complex us system that involves many stakeholders in determining drug prices.

Although the president claimed drug prices will be cut by “59%, PLUS!” in a social media post, it remains unclear what the impact of this policy will be at lowering medication costs for patients. There are a significant number of short and long term possible effects of this policy, such as opportunities for companies to 'game' how prices are set, and the potential for biomedical innovation to decrease due to reduced payments to drug companies by Medicare and reduced NIH research funding.

It’s also important to remember that the fact that the prices the Medicare program pays for drugs are not the same amount as what people covered by Medicare pay out of pocket; this makes it extremely difficult to predict how much, if anything, individuals will ultimately save at the pharmacy counter."

This article was originally published on Newswise: Immunology.