The Trump administration is targeting pharmaceutical companies with an executive order aimed at lowering U.S. drug prices while allowing higher prices abroad. President Donald Trump recently signed it, challenging drugmakers who believed they were making progress with the administration, according to an Axios report.
Under the order, the U.S. Department of Health and Human Services (HHS) is directed to set price reduction targets for public and private health programs within 30 days.
If negotiations with the industry fail, the administration will implement what’s called a “Most Favored Nation” policy to align U.S. drug prices with those of other developed nations, according to a White House official.
“Big Pharma will either abide by this principle voluntarily or we’ll use the power of the federal government to ensure that we are paying the same price as other countries to accelerate these price restrictions and reductions,” Trump said during a press conference, as reported by Axios.
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Prices for GLP-1 drugs, a widely used class of medications growing in popularity, are expected to drop significantly, Trump said during a recent press conference. He has referred to these drugs as “fat shots” because of their weight-loss effects.
HHS will also facilitate direct-to-consumer pharmaceutical sales at Most Favored Nation prices, according to Axios. Meanwhile, the Justice Department and the Federal Trade Commission will investigate anti-competitive practices that officials say contribute to high drug prices in the U.S.
The administration continues to argue that the United States, known as the world’s largest purchaser of pharmaceuticals, deserves better pricing. A White House official said cracking down on what they describe as unfair pricing policies in other countries will likely drive up drug costs abroad, boosting pharmaceutical companies’ revenue.
Trump has framed the executive order as a bid to force other nations to pay more for pharmaceuticals and reduce the financial burden on American consumers.
The pharmaceutical industry responded critically, arguing that high U.S. prices are driven by middlemen and foreign price-setting policies. “To lower costs for Americans, we need to address the real reasons U.S. prices are higher: foreign countries not paying their fair share and middlemen driving up prices for U.S. patients,” said Stephen Ubl, president of the Pharmaceutical Research and Manufacturers of America, in a statement to Axios.
Trump Administration Pressures Drugmakers on Pricing and Manufacturing
The Trump administration has intensified efforts to lower drug prices and bring pharmaceutical manufacturing back to the U.S.
Calley Means, special adviser to Health and Human Services Secretary Robert F. Kennedy Jr., said Trump will push for prices to align with Europe but won’t impose a set price, as reported by Yahoo Finance.
“I really don’t think it’s the government’s role to even say what the price should be. We just don’t want to pay more than other developed countries,” Means said.
Means condemned pharmaceutical companies threatening to cut billions in manufacturing investments, saying, “That is morally reprehensible. Go ahead and do it.”
The administration has already placed tariffs on medical devices and is considering a 20 percent tariff on medicines made outside the U.S. Trump also signed the Most Favored Nation executive order, requiring drugmakers to sell treatments at the lowest price available in any developed country.
Before the executive order, companies had pledged billions to onshore production. Roche proposed $50 billion, Johnson & Johnson planned $55 billion, and Eli Lilly committed $27 billion, according to Yahoo Finance.
AstraZeneca expressed cautious support for the policy but warned of potential disruptions. “We share President Trump’s commitment to ensuring that the cost of pharmaceutical innovation is fairly shared among high-income nations,” the company said.
“A Most Favored Nation pricing policy would need to be implemented with thorough stakeholder engagement and robust systems to avoid risking disrupting patient care,” the company added.
Some in the industry are growing frustrated. Roche is reconsidering its investment, and Eli Lilly’s CEO said the threat of tariffs has already motivated drugmakers. “Trump should declare victory and move on,” the executive said.
