President Donald Trump announced plans to sign an executive order on Monday aimed at dramatically reducing prescription drug prices in the United States. The order introduces a “most favored nation” policy, ensuring that the U.S. pays no more than the lowest price paid by any other developed country for the same medications.
In a social media post, Trump stated that the policy would lead to immediate price reductions ranging from 30% to 80%, addressing the issue that Americans currently pay significantly more for prescriptions compared to other countries.
The executive order directs the Department of Health and Human Services to align Medicare payments for drugs administered in doctors’ offices—such as cancer treatments and other injectables—with the lowest prices paid by any economically advanced nation.
This initiative revisits a similar proposal from Trump’s first term, which was blocked by courts during the Biden administration. However, the 2022 Inflation Reduction Act authorized Medicare to negotiate certain drug prices, potentially facilitating the implementation of the new policy.
The announcement has already impacted the pharmaceutical industry, with stocks of major companies like Pfizer, Merck, Johnson & Johnson, Eli Lilly, and Bristol-Myers Squibb experiencing declines in premarket trading. Analysts caution that while the policy could significantly affect pharmaceutical revenue, particularly through government-funded channels like Medicare and Medicaid, the order lacks clear implementation details.
Trump’s move is expected to face strong opposition from pharmaceutical companies, which argue that lower prices could hurt innovation and be influenced unfairly by foreign price controls. Nonetheless, the administration believes the policy will bring fairness to American healthcare pricing and align U.S. drug costs with global standards.
