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Drug Pricing in the Trump Era: Where to Invest Now

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  Published in Stocks and Investing on Sunday, August 24th 2025 at 18:53 GMT by investorplace.com
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Drug‑Pricing in the Trump Era: Where Investors Can Put Their Money Now
InvestorPlace – 24 August 2025

The United States has long been a paradox for pharmaceutical innovators: the country’s regulatory system pushes companies to develop breakthrough therapies, yet the pricing environment—especially under the Trump administration—has often stifled returns and fostered public backlash. InvestorPlace’s August 2025 feature, “Drug Pricing: Trump Era, Where to Invest Now,” lays out the policy landscape, analyzes its impact on the industry, and identifies segments that may offer the most attractive opportunities for investors in 2025 and beyond.

1. A Quick Retrospective on Trump‑Era Drug Pricing

The Trump administration’s stance on drug pricing was, for the most part, reactionary. While the 2017 and 2018 “Drug Price Negotiation Bill” was stalled in Congress, the White House issued a memorandum in 2020 directing the Department of Health & Human Services (HHS) to push for a price cap on Medicare’s prescription drug payments. The proposal, however, faced significant resistance from industry lobbyists and was never codified into law. The administration also championed the “Medicare Savings Act,” aimed at allowing Medicare to negotiate drug prices directly with manufacturers—again, a policy that never made it past committee hearings.

At the same time, the Trump administration made some concessions that benefitted the sector. The 2020 Prescription Drug Affordability Act allowed pharmaceutical companies to offer “patient assistance programs” and “co‑pay coupons” more aggressively, thereby improving sales volumes for blockbuster drugs. Moreover, the 2019 “Accelerated Approval” pathway for orphan drugs was extended, giving biotech firms a clearer route to market for rare‑disease treatments.

2. The Regulatory Road Ahead

In early 2025, the Biden administration has re‑affirmed its intent to implement the Medicare Reform Act of 2025, which would permit Medicare to negotiate prices for drugs that cost more than $12,000 per patient per year. This shift has made the sector more uncertain, as large pharma and biotech companies brace for price erosion on high‑cost therapies. Yet, the same policy has opened a new arena for value‑based pricing models and the growth of specialty pharmacies.

InvestorPlace’s article notes that the Pharmacy Benefit Managers (PBMs) have been pivotal players in the pricing debate. PBMs often dictate drug tiers and negotiate rebates, which can reduce out‑of‑pocket costs but also compress margins for manufacturers. With the upcoming PBM Transparency Bill slated for the Senate, investors may find value in companies that offer digital solutions for managing rebates and contracts.

3. Investment Themes Emerging from the Current Landscape

a. Value‑Based Contracting & Outcome‑Based Deals

Companies that have pivoted to value‑based contracting—where reimbursement is tied to real‑world outcomes—are poised for long‑term growth. Firms such as Medtronic, Johnson & Johnson’s Janssen, and Novartis have all announced multi‑year agreements that link payments to patient efficacy metrics. These models appeal to payers looking to manage rising costs while ensuring patient access.

b. Orphan Drug Development & Rare‑Disease Therapies

The 2025 Orphan Drug Act amendment provides extended market exclusivity and tax credits for rare‑disease treatments. Investors should keep an eye on biotech companies like Spark Therapeutics and Regeneron that have a pipeline of such drugs. The article links to a separate InvestorPlace piece titled “Orphan Drugs: The Next Frontier in Pharma” that details the financial upside of these agreements.

c. Digital Therapeutics & Telehealth Integration

The convergence of pharmaceuticals with digital therapeutics is creating new revenue streams. Companies such as Pear Therapeutics and Propeller Health have secured FDA approval for software‑as‑a‑medication products. With reimbursement pathways now being established for digital therapeutics, the intersection of tech and pharma offers a high‑growth niche.

d. Specialty Pharmacy & Distribution Networks

Specialty pharmacies have grown from a niche provider of rare‑disease drugs to a critical distribution arm for many large pharma companies. The article cites CVS Health’s Specialty Pharmacy and Walgreens’ Specialty Division as leaders, noting their integration with PBM platforms. Investors in logistics and supply‑chain tech may also benefit as the industry moves toward real‑time inventory monitoring and cold‑chain logistics.

e. Bio‑Pharma Startups & Venture Capital Funding

Despite pricing uncertainties, the venture capital appetite for innovative drug discovery remains robust. The article highlights a recent $300 million Series B raise for Alector, a neuro‑inflammatory biotech, as a testament to investor confidence. Venture funds focusing on gene editing (CRISPR) and RNA‑based therapeutics could see significant upside, especially given the policy shift toward accelerated approvals.

4. Risks to Watch

1. Regulatory Backlash – The proposed Medicare negotiation powers could trigger pushback from industry groups, potentially delaying implementation or creating loopholes that reduce the policy’s impact.
2. Rebate Pressures – With the PBM Transparency Bill, some manufacturers may opt to cut out PBMs entirely, altering the rebate dynamics that many companies rely on.
3. Patent Expirations – Key blockbuster drugs are on the cusp of patent expiry, and generic competition will erode margins—especially for companies with less diversified pipelines.
4. Global Supply‑Chain Disruptions – Ongoing geopolitical tensions in Asia and the Middle East threaten raw‑material supplies, potentially pushing up costs and shortening timelines.

5. Bottom Line: Where to Invest in 2025

The InvestorPlace article ultimately argues that the best bets for investors are in companies that have already embraced value‑based contracts, have robust orphan‑drug pipelines, and can leverage digital platforms to mitigate price pressures. Large incumbents such as Pfizer, Merck, and Roche have the resources to navigate regulatory changes, while mid‑cap firms like Alnylam and Editas Medicine can capitalize on niche therapeutic areas.

Additionally, the article recommends watching specialty pharmacy chains and PBM‑tech startups, as these entities will likely benefit from the growing demand for transparent, outcome‑driven drug pricing models.

In short, while the Trump‑era legacy of aggressive drug pricing reforms continues to reverberate, the evolving policy landscape of 2025 is creating fresh opportunities—particularly in segments where companies can demonstrate clear value to payers and patients alike.

Note: This article was drafted based on a summary of the InvestorPlace feature “Drug Pricing: Trump Era, Where to Invest Now” (August 2025). For a deeper dive into specific companies and detailed financial data, readers may refer to the linked sections on “Orphan Drugs” and “PBM Transparency.”