On Sunday evening President Trump took to Truth Social to announce that he would soon be signing "one of the most consequential Executive Orders in our Country's history" — a directive that would lower "Prescription Drug and Pharmaceutical prices … almost immediately, by 30% to 80%."
“Our Country will finally be treated fairly,” Trump vowed, “and our citizens Healthcare Costs will be reduced by numbers never even thought of before.”
Then, on Monday morning, the president followed through, signing the executive order he'd teased the previous night.
There was only one problem. In his Truth Social post, Trump had promised to enact something he called “a MOST FAVORED NATION’S POLICY”: a legal mechanism that would link U.S. drug prices to prices in peer countries and result in the United States paying ”the same price as the Nation that pays the lowest price anywhere in the World.”
But Trump's actual order did not do that. According to the New York Times, the document cites "no clear legal authority to force drugmakers to lower their prices"; instead, it simply "ask[s] them to do so voluntarily or face future regulatory actions or importation of drugs from foreign companies if they do not comply." At the same time, the order also "directs federal agencies to push European nations to pay higher prices for medications."
The order represents "something of a win for the pharmaceutical industry, which had been bracing for a policy that would be much more damaging to its interests," the Times added.
So will Trump’s plan actually lower your drug prices? Here’s what we know so far.
U.S. drug prices really are too high
Speaking from the Oval Office Monday, Trump bemoaned the status quo, noting — correctly — that "the pharmaceutical companies make most of their profits from America."
“That’s not a good thing,” Trump said.
Experts tend to agree. On average, Americans pay nearly three times as much for brand-name drugs as their counterparts in other countries — even though American laboratories and hospitals conduct much of the research required to develop these drugs in the first place (often with the help of grants from the federal government).
Pharmaceutical companies have long argued — via industry-funded studies — that Americans get what they pay for: faster access to drugs, with fewer insurance restrictions. They have also claimed that reduced profits would force them to spend less on research, depriving patients of new medicines.
But Trump’s order cast the arrangement in a different light, insisting that “drug manufacturers, rather than seeking to equalize evident price discrimination, agree to other countries’ demands for low prices, and simultaneously fight against the ability for public and private payers in the United States to negotiate the best prices for patients.”
America's fragmented health-care system — which, unlike other countries, lacks a central negotiator or any price controls — is mostly to blame.
“The U.S. market is the bank for pharmaceutical companies,” said Ameet Sarpatwari, an expert in pharmaceutical policy at Harvard Medical School, told the New York Times last year. “There’s a keen sense that the best place to try to extract profits is the U.S. because of its existing system and its dysfunction.”
Lowering drug prices is a worthwhile goal
In contrast to other Republicans — and against the wishes of Big Pharma — Trump has long shown interest in setting drug prices from Washington, D.C.
During the 2016 campaign, he said he wanted to let Medicare negotiate directly with drug companies on prices — a policy that congressional Republicans had previously prohibited.
And near the end of Trump's first term, in late 2023, the president enacted a similar "most favored nation" plan designed to guarantee the U.S. the lowest price for 50 expensive drugs it purchases for Medicare beneficiaries.
A federal court quickly blocked Trump's move, ruling that his administration had skipped steps in the policymaking process.
On Monday, both Trump and Health and Human Services Secretary Robert F. Kennedy, Jr., accused Democrats of inaction on drug prices. But the truth is, Trump has more in common with his predecessor Joe Biden than with his fellow Republicans on the issue.
In 2019, House Democrats passed a bill that would tie some U.S. drug prices to those paid by other nations, and under Biden, Medicare was finally able to negotiate directly with drug companies for the first time — saving a projected $6 billion in the process.
Will Trump’s plan work?
It’s too early to tell. Monday’s executive order doesn’t try to force “most-favored nation” pricing — at least not yet.
Instead, it calls on the health department, led by Kennedy, to spend the next 30 days brokering new price tags for drugs. If the drug companies fail to make a deal by June 11, then — and only then — will the administration “propose a rulemaking plan to impose most-favored-nation pricing.”
Dr. Mehmet Oz, the new administrator for the Centers for Medicare & Medicaid Services, will also be involved in these negotiations.
We'll see how the industry responds. "Importing foreign prices will cut billions of dollars from Medicare with no guarantee that it helps patients or improves their access to medicines," the top pharmaceutical lobby said in a statement released Sunday. "It jeopardizes the hundreds of billions our member companies are planning to invest in America, making us more reliant on China for innovative medicines."
We’ll also see how much power the president really has here — or chooses to deploy. On Monday, Trump mentioned various forms of leverage at his disposal: investigating drug companies’ pricing practices; importing more medications from overseas; even increasing auto tariffs in order to force other countries to pay more for drugs.
"If they want to get cute, they don't have to sell cars into the United States anymore," Trump warned. "They won't get cute."
Experts say that even if Trump follows through next month, Congress will probably have to pass its own most-favored nation pricing legislation to make the new policy stick.
"It's really important to do this legislatively," Democratic Sen. Pete Welch of Vermont told the New York Times.
Yet House Republicans declined to include Trump's idea in the new health care proposal they unveiled earlier on Monday — a plan that would "cut around $700 billion from Medicaid and the Obamacare marketplaces over a decade and would cause an estimated 8.6 million Americans to become uninsured," according to the Times.
Most-favored nation pricing could help lower drug prices for the 70 million older Americans on Medicare and the 80 million poor and disabled Americans on Medicaid; how it would affect patients who rely on private health insurance is less clear.
According to a 2017 report by the Commonwealth Fund, a private American foundation focused on health care reform, other ideas for lowering U.S. drug include restricting pharmaceutical monopolies within the country, reworking insurance benefits to limit out-of-pocket costs and recentralizing price negotiations by switching to a single-payer system (like Canada, France, Germany, Australia, the United Kingdom and dozens of other developed nations).
