About the Author
Ned Milenkovich, PharmD, JD, is chair of the health care law practice at Much Shelist PC and is the former vice chairman of the Illinois State Board of Pharmacy. He can be reached at nmilenkovich@muchlaw.com.
Spotlight
Clinical Role
Clinical
Supplement Spotlight
CE
Subscribe
Publication
Article
Pharmacy Times
August 2025Volume91 Issue 8
Examining the One Big Beautiful Bill Act on Prescription Drugs: Benefits and Criticisms
Author(s):
Key Takeaways
- The OBBB expands orphan drug exemptions, reversing Medicare price negotiations, costing the government billions in lost savings.
- Medicaid PBM transparency is improved, but significant Medicaid funding cuts threaten access for low-income patients.
The bill promises lower drug costs and greater innovation, but critics still have concerns.
Alongside many other goals, the One Big Beautiful Bill Act (OBBB; HR1), the Trump administration’s new tax law, addresses the escalating costs of prescription drugs in the US.1 Although this legislation aimed to make pharmaceuticals more affordable and accessible, it was met with both support and substantial criticism. Key issues such as orphan drugs, Medicaid cuts, the role of pharmacy benefit managers (PBMs), and tax incentives for pharma were at the forefront of the debate.
Image credit: izzuan | stock.adobe.com
THE ORPHAN CURES ACT: NEW EXEMPTIONS FOR RARE DISEASE DRUGS
The OBBB includes the Orphan Cures Act, which expands exemptions from Medicare negotiation to orphan drugs that treat multiple rare diseases—not just a single condition, as was the case in earlier drafts of the OBBB. This is estimated to cost the federal government approximately $5 billion over 10 years.2 Although seen as restoring incentives for rare disease research, critics argue it perpetuates high pricing and industry-friendly policy.
REVERSAL OF MEDICARE PRICE NEGOTIATIONS
One of the OBBB’s most consequential changes reversed key components of Medicare’s drug price negotiation authority, enacted under the Inflation Reduction Act of 2022. The OBBB expanded the list of drugs exempt from negotiation and delayed implementation of new price controls. According to the Congressional Budget Office, these changes are projected to cost the government approximately $5 billion in lost savings over the next decade.3
PBM TRANSPARENCY AND PRICING CLAUSES (MEDICAID)
The bill also features provisions targeting Medicaid PBMs. It prohibits spread pricing in Medicaid-managed care and requires PBMs to use transparent ingredient-cost-plus-dispensing-fee pricing and report detailed cost/payment data to states and the US Department of Health and Human Services on request. Although these measures promote clarity, comprehensive PBM reforms proposed earlier in House versions of the bill were dropped before final passage.4
TAX INCENTIVES FOR PHARMA AND RESEARCH AND DEVELOPMENT
The OBBB extends and amplifies existing tax breaks, including research and development (R&D) credits and incentives for onshoring manufacturing—measures favored by pharmaceutical manufacturers. This was solidified by tariff threats tied to domestic drug production (eg, up to 200% tariffs for imports).5
BENEFITS OF THE PRESCRIPTION DRUG PROVISIONS
There are some benefits of these provisions in the OBBB. First, by expanding orphan drug negotiation exemptions, the Orphan Cures Act encourages pharmaceutical companies to pursue multi-indication rare disease therapies. Industry supporters say this restores incentives unintentionally stymied previously.6 Secondly, the requirement for Medicaid PBMs to report costs and eliminate spread pricing enhances financial oversight, potentially saving Medicaid dollars and reducing opaque markups.
Additionally, pharmaceutical firms gain a favorable regulatory environment with extended R&D tax advantages and the promise of reshored manufacturing under new tariff incentives—viewed as good for long-term investment and domestic production.3
CRITICISMS OF THE PRESCRIPTION DRUG PROVISIONS
Of course, there are significant criticisms of the prescription drug provisions in the OBBB. Reversing parts of Medicare negotiation means fewer drugs subject to cost-cutting negotiation. The AARP and patient advocacy groups argue this change prioritizes Big Pharma profits over the needs of older adults and will raise out-of-pocket costs.6 Furthermore, the orphan cures exemption weakens the Medicare negotiation framework by exempting a broader class of drugs—reducing its anticipated savings. Critics have called it a “multibillion-dollar giveaway” to Big Pharma, undermining price-lowering efforts even before negotiations fully begin.4
Although the bill includes PBM reforms, it simultaneously slashes Medicaid funding by more than $1 trillion over a decade, raises co-pays, imposes work requirements, and tightens eligibility verification. Critics argue that those changes threaten prescription access for low-income and rural patients.7 Additionally, although Medicaid PBM rules are included, proposals to extend PBM transparency and reform into Medicare Part D plans were dropped from the final bill in the Senate. Advocates argue the bill missed a chance to bring systemic clarity to drug pricing across the broader system.
Economists, hospital groups like the American Medical Association, and policy analysts warn that the OBBB deepens inequality by funding tax cuts for the wealthy while dismantling popular health programs. Over 11 million Americans are projected to lose health insurance, and prescription drug affordability may worsen for many vulnerable populations.8
CONCLUSION
Ultimately, the OBBB delivers a mixed bag on prescription drugs:
- It downgrades Medicare’s ability to negotiate lower prices and grants broader negotiation exemptions for orphan drugs, tilting toward pharma interests.
- It improves transparency in Medicaid PBM contracts but cuts Medicaid funding and access—potentially worsening affordability and access to necessary medications. Out-of-pocket costs for key drugs may increase for seniors eligible for Medicare. New co-pays, verification hurdles, and funding reductions threaten access for low-income and Medicaid-covered patients. Meanwhile, pharmaceutical companies enjoy a favorable climate for orphan drug incentives and production investments.
REFERENCES
1. One Big Beautiful Bill Act, HR 1, 119th Cong (2025). Accessed July 17, 2025. https://www.congress.gov/bill/119th-congress/house-bill/1/text
2. Nigrelli C. Trump’s ‘Big Beautiful Bill’ revives incentives for orphan drugs. Straight Arrow News. July 9, 2025. Accessed July 17, 2025. https://san.com/cc/trumps-big-beautifulbill-revives-incentives-for-orphan-drugs
3. Trump’s “big and beautiful” 2025 bill: what it means for business owners, workers, and retirees. Drawpie. July 5, 2025. Accessed July 17, 2025. https://www.drawpie.com/en/post/trump-s-big-and-beautiful-2025-bill-what-it-meansfor-business-owners-workers-and-retirees
4. Brady K, Abram AK, Bates GH, et al. Republicans pass the One Big Beautiful Bill Act ahead of the July 4 deadline. Akin. July 3, 2025. Accessed July 17, 2025. https://www.akingump.com/en/insights/alerts/republicans-pass-theone-big-beautiful-bill-act-ahead-of-the-july-4-deadline
5. Wainer D. Trump says 200% pharma tariffs are coming: Wall Street shrugs. Wall Street Journal. July 13, 2025. Accessed July 17, 2025. https://www.wsj.com/health/pharma/trump-says-200-pharma-tariffs-are-coming-wallstreet-shrugs-16b7dbc4
6. Bushak L. ‘One big beautiful bill’ passes: here’s what pharma marketers need to know. MM+M. July 3, 2025. Accessed July 17, 2025. https://www.mmm-online.com/news/one-big-beautiful-bill-passes-heres-what-pharmamarketers-need-to-know
7. Cunningham PW, Abutaleb Y. What the GOP’s tax bill means for your health care. Washington Post. Updated July 1, 2025. Accessed July 17, 2025. https://www.washingtonpost.com/health/2025/07/01/trump-big-beautiful-billhealth-care-medicaid-impacts
8. Wilson S. What will be the consequences of Donald Trump’s “One Big Beautiful Bill”? MoneyWeek. July 14,2025. Accessed July 17, 2025. https://moneyweek.com/economy/us-economy-donald-trump-one-big-beautifulbill-consequences
Newsletter
Stay informed on drug updates, treatment guidelines, and pharmacy practice trends—subscribe to Pharmacy Times for weekly clinical insights.
Related Videos
Related Content
