To reshape the U.S. pricing system of medicines, President Donald Trump announced that he would issue an executive order significantly cutting the cost of prescription medicines. The goal: to bring U.S. prices closer to what other advanced nations pay, typically 30% to 80% less.
Trump announced on his social media platform, Truth Social, and stated that the order will be signed on Monday. The initiative targets a “Most Favored Nation” (MFN) pricing model, which would establish that America will not pay anything more for prescription drugs than the lowest-cost country among the leading nations.
Why Drug Prices Are So High in the U.S.
Americans consistently pay the world’s highest prices for prescription medications. The United States can pay up to three times what Canada, the U.K., and Germany pay to receive the same medicines, numerous studies have found. This is largely a function of little government regulation of medication prices and drug companies’ power to set their prices.
Trump’s MFN policy is the solution to that disparity. “They will climb around the Globe to equalize and, finally, after many, many years, BRING FAIRNESS TO AMERICA!” he tweeted in his message, as if foretelling that other countries could see prices increasing higher on prescription drugs while Americans get relief. Medicare Targeted for Reform
Sources familiar with the executive order reveal that it will disproportionately focus on Medicare, the government’s health insurance program for older adults and people with disabilities. The order should extend beyond the 10 drugs already selected for price negotiation under President Biden’s Inflation Reduction Act.
Those rates will take effect next year, with other medications to be bargained on later in 2025. Trump’s move may accelerate and prolong that effort and perhaps include more costly drugs.
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Industry Pushback Expected
Drug makers are pushing back. “Government price-setting of any kind is harmful to American patients,” said Alex Schriver, a spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA). The manufacturers argue that price controls would limit innovation, reduce research dollars, and retard the development of new treatments.
This is not the first attempt by Trump to link U.S. drug prices to global standards. During his last term, he put forward a similar plan that was ultimately blocked in court. That plan was estimated to save American taxpayers over $85 billion over seven years, nibbling away at the more than $400 billion spent annually on prescription medications.
What Comes Next
News of the new executive order is limited and is likely to raise legal and political obstacles upon its implementation. Trump’s move, however, adds more pressure on the nation’s dialogue towards drug price reform and is sure to influence future policy debate.
If all goes according to plan, the MFN pricing proposal will be a real transformation of America’s mindset about pharmaceuticals as an expense–potentially offering American patients a long-sought break in the pharmacy line.
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