TAPP Applauds Trump Executive Order Provision to Eliminate the “Pill Penalty”

The Trade Alliance to Promote Prosperity applauds President Trump’s Executive Order, issued on April 15, 2025, “Lowering Drug Prices by Once Again Putting Americans First,” for its call on Congress to eliminate the “pill penalty.”

This Executive Order seeks to fix a problem created by the Biden-era “Inflation Reduction Act” (IRA). The IRA requires the enforcement price controls on drugs under two different timelines at present: Small molecule drugs that are approved as New Drug Applications (NDAs) become eligible for price controls after nine years, while large molecule drugs, known as biologics, become eligible after 13 years. This unequal treatment has become known as the “pill penalty.”

A problem occurs with small molecule drugs that incorporate or utilize genetically targeted technologies that have similarly complex manufacturing requirements and development timelines as biologics. These drugs are often classified as small drugs, despite costing the time and money of large drugs. Nine years is too short a grace period for these genetically targeted technologies. Innovators will not invest in research into such a process because there is no hope of recovering the costs.

Among other provisions, President Trump’s Executive Order directs the Secretary of Health and Human Services to “work with the Congress to modify the Medicare Drug Prices Negotiation Program to align the treatment of small molecule prescription drugs with that of biological products, ending the distortion that undermines relative investment in small molecule prescription drugs, coupled with other reforms to prevent any increase in overall costs to Medicare and its beneficiaries.”

The legislative vehicle to eliminate the pill penalty is the bipartisan “Ensuring Pathways to Innovative Cures” (EPIC) Act (HR 7174) in the U.S. House of Representatives and companion legislation in the U.S. Senate. TAPP has urged passage of the EPIC act since its introduction in Congress.

TAPP applauds President Trump’s resolve to have his administration work with Congress to fix the pill penalty and, again, encourages swift passage of the EPIC Act.