President Donald Trump on Monday revived a controversial coverage that goals to slash drug prices by tying the costs of some drugs within the U.S. to the considerably decrease ones overseas.
Trump signed an govt order together with a number of completely different actions to resume that effort, often known as the “most favored nation” coverage. He didn’t seek advice from particular nations, however signaled that he would goal different developed international locations as a result of “there are some international locations that want some extra assist, and that is fantastic.”
“Mainly, what we’re doing is equalizing,” Trump stated throughout a press occasion on Monday. “We’re going to pay the bottom value there may be on this planet. We’ll get whoever is paying the bottom value, that is the value that we’ll get.”
White Home officers didn’t disclose which medicines the order will apply to, however stated it’ll influence the business market in addition to Medicare and Medicaid. They stated Monday’s announcement will probably be broader than an analogous coverage that Trump tried to push throughout his first time period, which solely utilized to Medicare Half B medicine.
Officers added that the administration could have a selected give attention to medicine which have the “largest disparities and largest expenditures,” which might embody well-liked weight reduction and diabetes therapies known as GLP-1 medicine.
It is unclear how efficient the coverage will probably be at decreasing prices for sufferers. In a social media submit on Monday, Trump claimed drug costs will probably be minimize by “59%, PLUS!”
However Trump throughout the press occasion claimed drug costs could fall much more, between 59% and 80%, or “I assume even 90%.”
Some Wall Road analysts and different consultants additionally questioned whether or not the coverage may be carried out.
In a observe on Monday, JPMorgan analysts known as the coverage “difficult to virtually implement” as a result of it might seemingly require congressional approval and will run into authorized hurdles.
It’s Trump’s newest effort to attempt to rein in U.S. prescription drug costs, that are two to a few instances larger on common than these in different developed nations – and as much as 10 instances greater than in sure international locations, in keeping with the Rand Corp., a public coverage assume tank.
In an announcement on Monday, the pharmaceutical trade’s largest lobbying group, PhRMA, lauded Trump for taking purpose at different nations “not paying their fair proportion.”
Nonetheless, PhRMA’s CEO Stephen Ubl stated “importing international costs from socialist international locations can be a foul deal for American sufferers and staff” as a result of it might harm the trade’s potential to deliver them new therapies. Some consultants have stated the order might face challenges from the pharmaceutical trade in court docket.
Regardless of the order, shares of U.S. drugmakers rose Monday. Merck‘s inventory added greater than 4%, whereas Pfizer and Amgen climbed greater than 2%
AARP, which advocates for older Individuals, thanked Trump for issuing the order in an announcement on Monday.
“For too lengthy, huge drug corporations have been ripping off America’s seniors—charging the very best costs on this planet for lifesaving prescriptions, padding their income on the expense of American lives, and forcing older adults to skip medicines they can not afford,” AARP’s chief advocacy and engagement officer Nancy LeaMond stated within the assertion.
How Trump’s drug pricing order will work
President Donald Trump, joined by Well being and Human Providers Secretary Robert F. Kennedy Jr., speaks throughout a press convention within the Roosevelt Room of the White Home on Might 12, 2025, in Washington, DC.
Andrew Harnik | Getty Photos
A part of the order takes purpose at nations overseas, which have extra energy to barter down drug costs with pharmaceutical corporations.
“Beginning in the present day, the USA will not subsidize the well being care of international international locations, which is what we have been doing,” Trump stated, including the U.S. “will not tolerate profiteering and value gouging from Massive Pharma.”
He added that “it was actually the international locations that pressured Massive Pharma to do issues that, frankly, I am undecided they actually felt comfy doing.”
The order directs the Workplace of the U.S. Commerce Consultant and the Division of Commerce to crack down on “unreasonable and discriminatory insurance policies” in international international locations that “suppress” drug costs overseas, the officers stated.
“We’re going to be working to make it possible for international locations aren’t being unfair of their negotiations with pharmaceutical corporations, proper?” one official stated. Drugmakers are “always complaining” about being put “in an untenable scenario when in these negotiations” as a result of these corporations sometimes need to dealer drug reductions with complete international locations, the official added.
In contrast to the U.S., a number of international international locations supply common well being protection the place the federal government is the only real payer, giving it vital leverage to barter or set drug costs.
White Home officers stated they anticipate drugmakers to supply reductions throughout the board to “reciprocate” the actions the Trump administration is taking to deal with costs overseas.
Trump’s order additionally directs the secretary of the Division of Well being and Human Providers to ascertain a pathway for U.S. sufferers to purchase their medicine immediately from producers at most favored nation costs, bypassing middlemen.
“We will minimize out the middlemen and facilitate the direct sale of medication on the most favourite nation value, on to the American citizen,” Trump stated.
Inside 30 days, the secretary will even need to set clear targets for value reductions throughout all markets within the U.S., in keeping with the officers. That can open up a spherical of negotiations between HHS and the pharmaceutical trade, officers stated, not offering precise particulars on the character of these talks.
If “satisfactory progress” isn’t made towards these value targets, HHS Secretary Robert F. Kennedy Jr. will impose essentially the most favored nation pricing on medicine by way of rulemaking.
The order additionally directs the Meals and Drug Administration to contemplate increasing imports from different developed nations past Canada. Trump signed a separate govt order in April directing the FDA to enhance the method by which states can apply to import lower-cost medicine from Canada, amongst different actions supposed to decrease drug costs.
Monday’s order additionally directs the Division of Justice and Federal Commerce Fee to aggressively implement “anti-competitive actions” that hold costs excessive within the U.S.
The Division of Commerce will even contemplate export restrictions that “gas and allow that low pricing overseas.”
The consequences on sufferers, corporations
Drugmakers have argued that essentially the most favored nation coverage would harm their income and in the end, their potential to analysis and develop new medicines.
White Home officers contended that pharmaceutical corporations will proceed to make cash after the value cuts in the event that they understand that the U.S. “alone isn’t going to pay for innovation” and in the event that they improve costs overseas to get extra income there.
Drugmakers “ought to pursue offers the place they get financially rewarded commensurate the worth that they’re offering to different nations, well being programs,” one official stated.
“Different international locations ought to pay analysis and growth, too. It is for his or her profit,” Trump added on Monday.
The trade additionally lobbied in opposition to related Trump plans throughout his first time period. He tried to push the coverage by way of within the remaining months of that time period, however a federal decide halted the trouble following a lawsuit from the pharmaceutical trade. The Biden administration then rescinded that coverage.
White Home officers initially pressed congressional Republicans to incorporate a most favored nation provision within the main reconciliation invoice they plan to move within the coming months, however the coverage would have particularly focused Medicaid drug prices, Politico reported earlier this month. A number of GOP members opposed that measure.
The trade’s largest commerce group, PhRMA, estimated that Trump’s Medicaid proposal might price drugmakers as a lot as $1 trillion over a decade.
Some well being coverage consultants have stated a most favored nation drug coverage is probably not efficient at decreasing treatment prices.
For instance, USC consultants stated the coverage “cannot undo the fundamental economics of the worldwide drug market,” the place 70% of pharmaceutical income worldwide come from the U.S.
“Dealing with a alternative between deep cuts of their U.S. pricing or the lack of weakly worthwhile abroad markets, we will anticipate many companies to tug out from abroad markets at their earliest alternative,” consultants stated in a report in April.
That can go away Individuals paying the identical quantity for medicines, drugmakers with decrease income and future generations of sufferers with much less innovation, they stated.
“In sum, everybody loses,” the consultants stated.
Even when the drug trade pushes again on Trump’s govt order in court docket, his administration nonetheless has one other instrument to push down drug costs: Medicare drug value negotiations.
It is a key provision of the Inflation Discount Act that provides Medicare the ability to barter sure prescription drug costs with producers for the primary time in historical past.
Trump final month proposed a change to that coverage that drugmakers have lengthy sought. Lawmakers on each side of the aisle might be receptive to the concept, which proposes altering guidelines that differentiate between small-molecule medicine and biologic medicines.
Trump final week stated he plans to announce tariffs on medicines imported into the U.S. throughout the subsequent two weeks. These deliberate levies purpose to spice up home drug manufacturing.
Drugmakers, together with Eli Lilly and Pfizer, are pushing again on these potential duties. Some corporations have questioned whether or not the tariffs are vital, provided that a number of of them have already introduced new U.S. manufacturing and analysis and growth investments since Trump took workplace.
Nonetheless, Trump final week doubled down on efforts to reshore drug manufacturing. He signed an govt order that streamlines the trail for drugmakers to construct new manufacturing websites.
