President Donald Trump has signed an executive order aimed at cutting the prices Americans pay for prescription drugs by matching them to the lowest rates found in other countries, according to Reuters. The order, which Trump announced on social media, is expected to lower drug costs by as much as 59%.
This policy is based on the "most favored nation" principle, meaning the U.S. would pay no more for medications than the country with the lowest price. The United States currently pays some of the highest drug prices in the world, often nearly three times more than other developed nations. In his first term, Trump tried to implement similar changes but was blocked by legal challenges. The new order is expected to focus on the Medicare program, which covers seniors and people with disabilities.
Pharmaceutical companies have been preparing for this move, which could have a significant impact on their profits. After the announcement, shares of major U.S. drug companies dropped by 2% to 3%, reflecting concerns about the order’s financial impact. Reuters notes that the administration has not yet provided full details on how the new pricing policy will be enforced, but the move has already affected global pharmaceutical markets.
According to the White House, the executive order instructs several government agencies to ensure that Americans and U.S. taxpayers get the best possible deal on prescription drugs. The U.S. Trade Representative and the Secretary of Commerce are directed to act against foreign practices that keep drug prices low abroad but contribute to higher prices in the United States. The Secretary of Health and Human Services will set up a system allowing American patients to buy drugs at the “most-favored-nation” price, bypassing middlemen who often add costs. If drug manufacturers do not offer these lower prices, the order requires the government to propose new rules and take strong actions to reduce costs for consumers.
The order also expands previous efforts by including Medicaid, not just Medicare, in the pricing reforms. The White House fact sheet mentions that Trump has recently signed other executive orders to increase transparency in drug pricing, provide discounts for low-income patients, and support the importation of lower-cost medicines from other countries. The administration argues that Americans have been paying much more than people in other countries for the same drugs, and this order is meant to stop that practice. The White House emphasizes that these changes are part of a larger effort to put American patients first and stop foreign countries from taking advantage of U.S. pharmaceutical innovation.
NPR reports that while the executive order is designed to lower drug prices by tying them to those in other developed countries, there is uncertainty about how and when the changes will take effect. The first set of lower prices for Medicare drugs is not expected to start until January 2026, and the exact process for setting and enforcing the new prices remains unclear.
Sources:
https://www.npr.org/sections/shots-health-news/2025/05/12/nx-s1-5395625/trump-lower-drug-prices
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