Stephen I. Feller , 2025-05-12 18:46:00
Key takeaways:
- President Trump ordered his administration to identify and enforce drug price limits based on what other countries pay.
- The order also directs HHS to create a mechanism for consumers to buy drugs directly from manufacturers.
President Donald J. Trump on Monday signed an executive order aimed at requiring “most favored nation” prices for some medications, which he said would significantly decrease their cost in the United States.
Trump said during a press conference at the White House and in posts on social media that he expects prices to decline for people in the U.S. by at least 59% — if not as much as 80% or 90%.
President Donald J. Trump signed an executive order aimed at reducing drug prices in the United States. Image: Adobe Stock
Trump said the U.S. has 4% of the world’s population but that pharmaceutical companies make an overwhelmingly higher proportion of their profits here. His order directs officials to take actions against foreign countries that engage in practices to undercut market prices, which drives up prices in the U.S., and to communicate price targets to pharmaceutical manufacturers. The goal, the order says, is to “establish that America, the largest purchaser and funder of prescription drugs in the world, gets the best deal.”
“It’s called ‘most favored nation,’” Trump said. “We are going to pay the lowest price there is in the world. Whoever is paying the lowest price, we will look at that price and we will say, ‘That’s the price we’re going to pay.’”
The order instructs HHS to establish a mechanism through which Americans can buy medication directly from manufacturers, “bypassing middlemen.”
Manufacturers would be required to establish prices within the “most favored nation” requirements. If they do not follow the price guidelines, HHS is instructed to propose rules to force manufacturers to follow the pricing and to “take other aggressive measures to significantly reduce the cost of prescription drugs.”
Although a White House official told reporters that the administration has not identified specific drugs to target, Trump referred to a cancer drug that costs one-sixth less in Australia and one-tenth less in Sweden, a “common” asthma drug that costs less than one-tenth the price in Great Britain, and a GLP-1 drug in Great Britain that costs roughly 90% less than in the U.S.
In a statement, the president and CEO of the pharmaceutical manufacturing advocacy group Pharmaceutical Research and Manufacturers of America — or PhRMA — described the plan as “importing foreign prices from socialist countries” and called it a “bad deal for American patients and workers.” He said the plan would make the U.S. “more reliant on China for innovative medicines.”
“To lower costs for Americans, we need to address the real reasons U.S. prices are higher: Foreign countries not paying their fair share and middlemen driving up prices for U.S. patients,” Stephen J. Ubl said.
“The administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines. U.S. patients should not foot the bill for global innovation,” he said. “The U.S. is the only country in the world that lets [pharmacy benefit managers], insurers and hospitals take 50% of every dollar spent on medicines. The amount going to middlemen often exceeds the price in Europe. Giving this money directly to patients will lower their medicine costs and significantly reduce the gap with European prices.”
During his first term in office, Trump also signed an executive order to implement the most favored nation concept, although it was later struck down in court.
Former President Joe Biden’s administration abandoned that effort in favor of negotiating for price cuts, achieving them in a first round of negotiations for 10 medications. On Jan. 17, CMS announced it had selected 15 for the second round of negotiations.
In April, Trump signed an expansive executive order to begin addressing the costs of Medicare premiums and medications, accelerate and improve the FDA drug approval processes, and reevaluate the role of middlemen, some of which is addressed in the new order.
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