Building on transparency: the foundation for market reform
The latest EO follows closely on the heels of the February announcement, which focused on making healthcare pricing more transparent. That order requires hospitals, payers, and drug manufacturers to provide clear, accessible pricing information. The aim is to empower patients with the data needed to make informed healthcare decisions and to encourage consistency in pricing across the system.
Together, the two EOs represent a coordinated effort to tackle high drug prices from both ends: by increasing transparency and by rebalancing incentives to promote affordability and competition. For pharma, this translates into a dual mandate – prepare for increased scrutiny while also demonstrating measurable value.
Implications for pharma
These policy shifts are not isolated changes – they are reshaping the framework in which market access decisions are made. At VML Health, we see a number of potential implications for pharma:
- Impact on innovation strategy: Redirecting R&D incentives toward small molecules may alter pipeline planning. Companies will need to reexamine development timelines, target indications, and their overall portfolio mix in light of evolving ROI considerations.
- Pressure on orphan drug development: As policy reforms ripple through the industry, the already-challenging economics of rare disease treatments may face new hurdles – particularly for therapies without dedicated incentives.
- Adjusted ROI expectations: New pricing pressures – including those from Medicare negotiations and price caps – are prompting companies to rethink revenue forecasts and investment models.
- Acceleration of value-based approaches: With price under greater scrutiny, there is heightened urgency to demonstrate not just clinical efficacy, but real-world outcomes. Expect value-based agreements (VBAs) to become increasingly central to US access and reimbursement strategies.
Despite these headwinds, the evolving policy landscape presents an opportunity to rethink how value is defined, captured, and communicated.
What we’re watching
As with any major policy shift, the ultimate impact will depend on how these orders are implemented. At this stage, we have more questions than answers:
- How will the administration enforce these policies? Will CMS or other federal bodies lead execution, and what timelines will be set?
- Will price reductions trickle down to patients? Or will intermediaries such as pharmacy benefit managers (PBMs) influence how those benefits are distributed?
- Which stakeholders will absorb pricing pressures? Will manufacturers bear the brunt, or will we see structural adjustments across the supply chain, including changes to rebate and contracting models?
The answers to these questions will shape how companies respond – and how they build access and pricing strategies in the months and years ahead. We’ll be monitoring developments closely.
