Trump Administration proposes new Medicare rule to lower prescription drug costs

Summary

The Trump administration on Thursday (July 2) proposed a rule aimed at preventing hospitals from charging large markups on discounted prescription drugs provided to Medicare patients, a move it says could save beneficiaries an estimated $1.1 billion next year. The proposal, issued by the Centers for Medicare & Medicaid Services (CMS), targets hospitals participating in the federal 340B Drug Pricing Program, which allows eligible hospitals serving low-income patients to purchase outpatient prescription drugs at significantly discounted prices. The rule targets hospitals participating in the 340B Drug Pricing Program, a federal program that allows hospitals serving low-income and vulnerable patients to purchase outpatient prescription drugs at heavily discounted prices. Currently, these hospitals can buy drugs at steep discounts but are often reimbursed by Medicare at much higher rates, allowing them to keep the difference. Patients' co-payments are also based on these higher reimbursement amounts, increasing their out-of-pocket costs. Under the proposed rule, CMS would reduce Medicare reimbursements for these hospitals to reflect the lower prices they pay for the drugs. The administration said the formula is based on a survey ordered by President Donald Trump through an executive order signed in April 2025, which examined how much hospitals actually pay to acquire prescription drugs. Over time, however, it has become one of the most contested areas of US healthcare policy. Ashley Thompson, the association's senior vice president for public policy analysis and development, said the proposal would undermine hospitals' ability to maintain critical services and preserve affordable access to care for vulnerable patients. Stay updated with the latest Trending , India , World and US news.