In a decisive move to rein in the skyrocketing cost of prescription drugs, the White House issued a sweeping executive order on April 15 that could alter how medication is priced, reimbursed, and delivered across the country. While several directives in the order include implementation windows stretching up to 180 days, a handful of changes are set to trigger consequences almost immediately—particularly for hospitals, health centers, and federal payers.
The order targets core pricing levers in Medicare and the 340B Drug Pricing Program, signals a major shakeup in site-of-care reimbursements, and presses for a fast-tracked overhaul of how the government pays for the most expensive drugs on the market. Millions of Americans who depend on insulin, epinephrine, or infused therapies could see ripple effects sooner than expected. Below are four critical actions from the executive order that are already reshaping policy and practice.
1. Health Centers Must Offer Discounted Insulin and Epinephrine—Or Risk Federal Funding
Effective immediately, the Department of Health and Human Services (HHS) is required to enforce a new condition for federally funded health centers: they must offer insulin and injectable epinephrine at or below the price they paid under the 340B Drug Pricing Program. The mandate applies to all eligible patients, and health centers have just 90 days to comply or risk losing federal grants.
This directive effectively ends the practice of markups on two of the most essential and life-sustaining medications in the U.S. It marks one of the most direct federal interventions into the cost of routine, chronic-care drugs.
Why it matters:
- Patients at federally qualified health centers (FQHCs) could see immediate price relief, especially for out-of-pocket costs tied to insulin and allergy medications.
- Clinics that have depended on limited markup margins to maintain operations may face budget pressure.
- It signals that the 340B program, long a point of contention between hospitals and drugmakers, is now under tighter federal scrutiny.
What to watch:
Will this model expand to cover other classes of high-use medications like asthma inhalers or blood pressure drugs? Will PBMs and drugmakers counter by challenging the move legally or contractually?.
2. Medicare Payment Incentives for Drug Administration Are Under Review
The executive order also instructs HHS to evaluate how Medicare’s payment model may be unintentionally pushing providers to administer drugs in hospital outpatient departments rather than lower-cost physician office settings. This evaluation must result in proposed changes within 180 days.
Currently, Medicare Part B reimburses hospitals at a higher rate for the same infused or injectable therapies that could be given in community-based clinics. That payment structure incentivizes providers to shift drug administration to hospital settings—often driving up both Medicare spending and patient co-pays.
Why it matters:
- This could completely reshape how and where patients receive drugs like chemotherapy, rheumatoid arthritis biologics, and long-acting injectables.
- Hospitals may face revenue cuts if outpatient infusion reimbursements are reduced or aligned with office-based rates.
- Physician-owned practices could benefit, regaining ground they lost to hospital acquisitions over the past decade.
What to watch:
Expect a political battle over site-neutral payment policies. Hospitals argue that they treat sicker, more complex patients, and deserve higher compensation. Meanwhile, payers and watchdog groups have long called for site-of-care parity.
3. Acquisition Cost Surveys for Outpatient Drugs Are Underway
Hospitals won’t have long to wait for the next major shift. The order requires HHS to begin surveying hospital outpatient departments about what they actually pay for covered outpatient drugs. These acquisition cost surveys will be used to inform future reimbursement rate adjustments—potentially cutting payments that exceed the real cost of the drugs.
This process starts now. And while the data collection will take time, the goal is clear: align federal payment with actual acquisition costs.
Why it matters:
- Hospitals that rely on the difference between drug acquisition cost and Medicare reimbursement may see those margins shrink.
- CMS is expected to use the results to propose future payment cuts under the banner of “budget neutrality,” redirecting savings elsewhere in Medicare.
- The survey also lays groundwork for a broader move toward reference-based pricing models—already floated in past CMS proposals.
What to watch:
Will safety-net and rural hospitals be shielded or subsidized? Could this trigger new legal battles over Medicare’s authority to reset payment baselines?
4. A New Payment Model for High-Cost Drugs Is Coming Fast
Perhaps the boldest element in the executive order is a demand for HHS to develop and propose a new alternative payment model (APM) for the highest-cost prescription drugs—within just 60 days.
The order doesn’t detail which drugs are targeted, but stakeholders assume it refers to gene therapies, specialty biologics, and one-time treatments with price tags exceeding $500,000. These treatments, while revolutionary, represent an unsustainable burden on public and private insurance plans.
Why it matters:
- The model may introduce value-based pricing, linking payment to patient outcomes rather than list prices.
- Pharmaceutical manufacturers could face new pricing caps or performance guarantees for reimbursement.
- Medicare and Medicaid could become the testing ground for wider payment reform that private insurers eventually adopt.
What to watch:
Will the new model be rolled out as a pilot or a full-scale initiative? How quickly will drugmakers and insurers adapt? And will it survive industry lobbying and legal scrutiny?
A Turning Point in the Drug Pricing Debate
This executive order marks one of the most immediate and forceful federal actions on drug pricing in years. It signals a willingness to test regulatory levers quickly—and sets deadlines aggressive enough to create real market movement within weeks.
For patients, this could bring much-needed relief—especially for those managing chronic illnesses or facing high out-of-pocket costs. For hospitals, pharmaceutical companies, and payers, the next 90 days will require swift recalibration.
The message is clear: the era of slow-moving price reform is over. The White House is moving fast, and everyone else will have to catch up.