Prescription drug costs in the United States have been out of control for ages, and it’s only getting worse. But after a weekend rant about the U.S.’s “embarrassing” drug prices, President Donald Trump signed an expansive executive order he claimed would slash drug prices nationwide by reviving a controversial policy from his first term.
On Sunday, Trump announced his plans in a lengthy post on Truth Social, writing that the U.S.’s elevated prescription drug costs were “always very difficult to explain and very embarrassing”. According to the U.S. Department of Health and Human Services, prescription drug costs increased by 15.2% between January 2022 and January 2023. And last year, a RAND report found that U.S. prescription drug prices are about 2.78 times higher than those in 33 other nations.
In his post, Trump stated that his new executive order will “almost immediately” reduce drug costs by 30 to 80 percent and save the U.S. “TRILLIONS OF DOLLARS”.
“They will rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!” Trump wrote. “I will be instituting a MOST FAVORED NATION’S POLICY whereby the [U.S.] will pay the same price as the Nation that pays the lowest price anywhere in the World. Our Country will be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before.”
Per Barrons, a White House official said that HHS Secretary Robert F. Kennedy will be “directed to facilitate, where appropriate, direct to consumer sales at most favored nation prices” and “set clear targets for price reductions” to open up negotiations. If companies don’t make progress on those goals, then HHS will “impose most favored nation pricing via rulemaking.” When asked about the insurance market, the official only said, “We are again looking for price reductions for people across all markets, including commercial insurance and federal payers.”
In addition, the U.S. Federal Trade Commission is being directed to take action against anti-competitive practices. Reuters reported on Monday that a White House official said, “We’re all familiar with some of the places where pharmaceutical companies push the limits to prevent competition that would lower their prices,” like patent protections or making deals with generic companies.
Although Trump has made big promises regarding this newest proposal, it’s likely to just be a lot of talk. Arthur Caplan, the head of the medical ethics division at NYU Langone Medical Center, told NBC News, “We are not going to get the price paid by South Africa, Peru, Egypt, Bolivia, and Laos. Drug companies usually give whooping discounts to very poor countries on humanitarian grounds…The prices paid in the poorest nations have no chance of being the price paid by the Trump administration.”
In addition, experts with the University of Southern California’s Schaeffer Institute warned last month that most favored nation policies are easily gamed. They also pointed out that companies may simply pull out of overseas markets to lock in U.S. prices since the U.S. makes up about 70% of global pharmaceutical profits.
During his first term, Trump tried to implement a most-favored-nations policy that was ultimately blocked by a federal judge. However, NBC News reports that experts in the field said Trump’s new policy is far more aggressive than his previous attempt. For example, it will not be limited to certain medications under Medicare but will also apply to those covered by Medicaid and private insurance.
Trump’s new executive order comes after he signed another order last month that illustrated steps that the federal government would take to lower drug prices. But even those proposals were “all bark and no bite,” according to Sen. Ron Wyden (D-Oregon), a member of the Senate Finance Committee.
Wyden also condemned Trump’s previous order as being “rife with goodies that Big Pharma has been begging for, primarily by weakening Medicare negotiation”, a Biden-era program that allows the federal government to negotiate directly with drug companies. He added, “Democrats created Medicare’s drug negotiation authority without a single Republican vote – now is the time for Trump to faithfully follow the law Congress passed without watering it down at Big Pharma’s request.”
Ultimately, it’s unclear what exact impact Trump’s new executive order will have on drug costs, or if it will face pushback in the courts. But at the same time that Trump ranted about drug costs online, House Republicans introduced legislation to slash Medicaid that would cost millions of people their insurance.
