On Monday, President Donald Trump will sign a significant executive order aimed at reducing the costs of medications in the United States. This executive order mandates the U.S. Department of Health and Human Services to negotiate lower prices directly with pharmaceutical companies. According to a White House official, the Department has a strict 30-day deadline to establish new pricing agreements for essential drugs.
If the health department fails to secure a deal within the stipulated time frame, a new regulation will be activated, linking U.S. drug prices to those paid by other countries. This move is part of Trump's broader strategy to implement a "most favored nation" policy, ensuring that the U.S. pays the same rates as the country with the lowest prices globally.
Trump announced the executive order via a social media post on Sunday evening, expressing his commitment to making drug prices fairer for American citizens. He stated, “I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World.” The signing event is set to take place at the White House on Monday morning.
The federal government allocates hundreds of billions of dollars annually for prescription drugs, including injectables and transfusions, primarily through Medicare, which serves nearly 70 million older Americans. Consequently, the executive order has sparked significant debate within the pharmaceutical industry.
On Sunday, the leading pharmaceutical lobby, PhRMA, criticized the executive order, labeling it a “bad deal” for American patients. The organization argues that threatening profit margins could jeopardize the research and development of new medications. Stephen J. Ubl, the president and CEO of PhRMA, stated, “Importing foreign prices will cut billions of dollars from Medicare with no guarantee that it helps patients or improves their access to medicines.”
Trump's approach to Medicare drug pricing has been met with controversy since its initial proposal during his first term. In the closing weeks of his presidency, he signed a similar executive order, which aimed to ensure that U.S. prices matched those of other countries for drugs administered in doctors' offices. However, this order faced legal challenges, and a court ruling blocked its implementation under President Joe Biden's administration.
Critics of Trump’s 2020 initiative contended that it would give foreign governments undue influence over the valuation of medicines in the U.S. Despite these challenges, Trump remains optimistic about the potential savings for taxpayers, claiming that the new policy could lead to unprecedented reductions in healthcare costs.
While Trump has touted potential savings of “TRILLIONS OF DOLLARS,” it’s essential to note that the health department has limited authority over drug prices, especially concerning private insurance coverage. The agency primarily controls pricing for Medicare and Medicaid, which together cover about 80 million low-income and disabled Americans.
In addition to negotiating prices, the executive order will also prompt the Department of Justice and the Federal Trade Commission to explore enforcement actions related to drug pricing practices. The U.S. consistently spends more on medications compared to other wealthy nations, a concern that has garnered bipartisan attention but has yet to result in a comprehensive legislative solution.
Throughout his presidency, Trump has repeatedly criticized the pharmaceutical sector, accusing companies of exploiting American consumers. In his recent remarks, he highlighted the industry's claims that research and development costs are borne solely by Americans. He stated, “Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the ‘suckers’ of America, ALONE.”
Furthermore, he addressed the influence of lobbying in the industry, asserting that campaign contributions have historically swayed political decisions. “We are going to do the right thing,” he concluded, emphasizing his commitment to reforming drug pricing in the U.S.
