President Donald Trump recently signed an executive order aimed at lowering the cost of prescription drugs in the United States by linking domestic prices to those paid in other developed countries, while pressuring foreign governments to stop practices his administration says contribute to higher costs for Americans.
The directive introduces what’s described as a “most-favored-nation” pricing model, which requires that U.S. patients pay no more for certain medications than the lowest price charged in countries with single-payer health systems, according to news reports.
“In case after case, our citizens pay massively higher prices than other nations pay for the same exact pill, from the same factory,” Trump said in an emailed press release. “Effectively subsidizing socialism abroad with skyrocketing prices at home.”
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The pharmaceutical industry and foreign governments have not yet issued formal responses to the order, according to Axios.
The order comes as Americans continue to grapple with high out-of-pocket costs for prescription drugs, particularly for newer and in-demand medications like GLP-1 drugs used to treat diabetes and obesity.
A senior White House official, along with Trump, has mentioned that those drugs are among the ones likely to see price drops under the new policy.
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But the pharmaceutical industry, which had recently ramped up efforts to collaborate with the administration on pricing reforms, faces uncertainty.
The ‘Fat-Shot Drug’
Speaking to reporters before departing for a diplomatic trip to the Middle East, Trump said the idea for the executive order partly stemmed from a conversation with a friend in the United Kingdom.
“I got a call from a friend of mine in London,” Trump said. “He’s a brilliant businessman, highly neurotic, seriously overweight. He told me he was able to get the fat-shot drug, the weight loss drug — for almost nothing. But when he tried to get it here, it cost him a fortune.”
The anecdote highlighted a longstanding criticism of the global drug pricing system: that Americans often pay far more for the same medications than patients abroad, where governments negotiate directly with pharmaceutical companies.
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What the Executive Order Does
The order directs the U.S. Trade Representative and Secretary of Commerce to take steps to confront what the White House calls “unfair” foreign pricing policies. The administration argues that by suppressing prices overseas, foreign governments shift research and development costs back onto the U.S. market.
The Secretary of Health and Human Services (HHS) is ordered to:
- Create a mechanism for American patients to buy drugs directly from manufacturers at “most-favored-nation” prices, bypassing intermediaries.
- Communicate drug price targets to manufacturers, establishing the U.S. as the benchmark buyer.
- Propose new rules if manufacturers don’t comply, including direct price-setting and other aggressive measures to curb costs and counter anti-competitive behavior.
The administration will also prioritize price cuts for drugs with the greatest cost gaps between the U.S. and other countries.
HHS has 30 days to establish reduction targets across public programs and private markets, which could trigger a wave of negotiations between the federal government and pharmaceutical companies.
White House Says U.S. Patients Pay Far More for Brand-Name Drugs
The Trump administration is again highlighting the gap between what Americans pay for prescription drugs and what patients in other developed countries are charged.
According to data cited in a White House press release, U.S. patients pay more than three times as much for brand-name medications compared to other countries in the OECD, even after accounting for discounts.
Officials also pointed out that while the United States has less than five percent of the world’s population, it contributes to roughly 75 percent of global pharmaceutical profits.
The Trump administration argues that drug companies offer steep discounts to foreign governments in order to gain access to their markets, then recoup those losses by charging significantly more in the United States.
During Trump’s first term, the administration introduced a plan to tie Medicare drug prices to rates paid by economically similar countries, White House officials said. That policy was later rolled back by the Biden administration before it could take effect.
They criticized Biden’s approach, saying that instead of closing the pricing gap, the Biden administration negotiated prices that remained, on average, 78 percent higher than those in 11 comparable countries.
