On May 11, 2023, U.S. President Donald Trump announced his intention to sign an executive order aimed at significantly reducing prescription drug prices. The proposed initiative seeks to align U.S. drug costs with those of other high-income countries, potentially lowering prices by an estimated 30% to 80%. This announcement was made via a post on Truth Social, where Trump indicated that he would take action on Monday morning to implement what is known as most favored nation pricing or international reference pricing.
The United States currently faces the highest drug prices globally, often paying nearly three times more than other developed nations for many prescription medications. Trump has expressed a commitment to narrowing this gap but has not disclosed specific methods or additional details regarding the executive order in his post. He stated, "They will rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!"
Trump elaborated, "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." This proposed policy aims to ensure that Americans are not charged exorbitantly compared to their counterparts in other nations.
Industry insiders, including four lobbyists from the pharmaceutical sector, have indicated that drug manufacturers have anticipated such an order that would primarily impact the Medicare health insurance program. Reports suggest that this new policy could encompass a broader range of drugs beyond those currently subject to negotiations under the Inflation Reduction Act initiated by former President Joe Biden.
Under Biden's administration, Medicare has begun negotiating prices for ten specific drugs, with these new prices scheduled to take effect next year. Furthermore, additional medications are set to be negotiated later this year. However, the pharmaceutical industry has voiced concerns regarding government price setting, with Alex Schriver, a spokesperson for the Pharmaceutical Research and Manufacturers of America, stating, "Government price setting in any form is bad for American patients." This sentiment reflects the ongoing debate about how best to manage drug pricing without compromising patient access and care.
This isn't the first time Trump has attempted to link drug prices to international standards. During his first term, a proposed international reference pricing program faced legal challenges and was ultimately blocked by a court. That earlier initiative was projected to save U.S. taxpayers over $85 billion over seven years, significantly reducing the nation’s annual drug expenditure, which exceeds $400 billion.
As the situation continues to evolve, the implications of Trump's executive order on both consumers and the pharmaceutical industry remain to be seen. The administration's approach to drug pricing will likely be a focal point in the ongoing discussion about healthcare affordability in the United States.
