- Key Points
- President Donald Trump wants to lower U.S. drug costs by linking prices to those paid in other developed countries – a move that experts say could face a challenging path to becoming a reality.
- Trump signed a sweeping executive order directing several federal agencies to renew that effort, called the “most favored nation” policy.
- Health policy experts said it is still unclear how much prices will go down, how much the policy will affect patients and drugmakers, which medicines will be impacted, and whether Trump can even implement it.
President Donald Trump, joined by National Institutes of Health (NIH) Director Jay Bhattacharya, speaks during a press conference in the Roosevelt Room of the White House on May 12, 2025, in Washington, DC.
Andrew Harnik | Getty Images News | Getty Images
Experts stated that President Donald Trump may have a tough time implementing a suggestion to lower U.S. Drug charges using linking fees to those paid in other evolved nations on Monday. Trump signed a sweeping government order directing numerous federal businesses to resume the attempt to cut expenses, known as the “maximum preferred state” policy. It essentially aims to tie the costs of a few drugs inside the U.S. To noticeably lower ones overseas, or what Trump described as “equalizing” charges.
He did not divulge which genuine medications the order will practice to, but said it’s going to affect the commercial market as well as the general public Medicare and Medicaid applications. That’s broader than a similar policy proposal from Trump’s first term, which become in the long run blocked in court after the pharmaceutical industry challenged it.
Trump is aiming at a longstanding issue that, beyond administration, some have also tried to confront: U.S. Prescription drug prices are three times higher on average than those in other advanced nations, and up to ten times greater than in certain countries, consistent with the Rand Corporation, a public policy think tank.
The president claimed the order will help lower drug expenses by fifty percent and 80%, or “I guess even ninety.” But fitness policy specialists said it’s miles nonetheless doubtful how an awful lot the coverage may want to reduce prices for sufferers, how an awful lot it will have an effect on drugmakers’ earnings, which drugs may be focused — and whether or not Trump can even put the plan into impact inside the first region.
Investors appeared to shrug on Monday approximately how a whole lot the plan might hit essential drugmakers. Shares of Gilead
rose 7%, Merck
grew by using five: Pfizer Squibb, Bristol Myers, and Amgen
climbed greater than three percent nd Eli Lilly
rose by more than 2%.
JPMorgan analysts on Monday known as the coverage “tough to practically put in force” due to the fact it might likely require congressional approval and could run into criminal demanding situations from drugmakers. Notably, numerous Republican lawmakers are antagonistic, inclusive of a most desired country provision in the most important economic policy bill they plan to bypass within the coming months.
In a notice, the analysts said, “The avenue beforehand may be muddy.” While specialists subsidized the concept of reducing expenses, they raised doubts about whether other nations and drugmakers will do what Trump hopes to achieve with the order.
“We’re unlikely to get the drug companies to voluntarily lower their costs, and we’re not going to get the alternative countries to voluntarily boom their costs, proper?” stated Gerard Anderson, professor of health coverage and control at the Johns Hopkins Bloomberg School of Public Health
What does Trump’s policy do, and can it work?
Trump’s order takes goal in part at different countries, a lot of which have single-payer health structures with extra leverage to negotiate down drug fees with manufacturers. In evaluation, the U.S. has a patchwork of public and private coverage, and is partially predicated on middlemen to set expenses.
The president’s coverage directs the Office of the U.S. Trade Representative and the Department of Commerce to fight what the administration knows as “unreasonable and discriminatory guidelines” in foreign nations that “unfairly undercut marketplace expenses and pressure charge hikes in the United States.”
In a declaration on Monday, the pharmaceutical enterprise’s biggest lobbying organization, PhRMA, lauded Trump for targeting other countries for what they deemed “not paying their fair share.”
But other international locations’ governments are simply negotiating within the limits of their countrywide health budgets, not using “unfair” techniques like Trump claims, said Lawrence Gostin, a professor of public health law at Georgetown University. He added that they may be securing honest prices for their countries, which “has nothing to do with undercutting the U.S.”
It’s unclear what actions the U.S. Should take to pressure other countries to do so, but Anderson said there may currently be no incentive for them to hike their expenses.
“They have a machine that works for them and that they get decreased prices. Countries like France and Switzerland are not going to take a seat there and say, ‘Hey, now I need to pay more,’” he said.
The pharmaceutical enterprise could want to peer price hikes in international locations in the European Union before it voluntarily lowers any drug costs in the U.S., JPMorgan analysts stated. That makes other portions of the govt order seem likely to come to pass.
Trump’s order directs the Health and Human Services secretary to establish a way for U.S. Sufferers to shop for their drugs directly from manufacturers at “maximum preferred nation” fees, reducing our middlemen. The order mentions “direct-to-client buying applications,” without further information.
His plan additionally requires HHS Secretary Robert F. Kennedy Jr. to provide drugmakers charge discount targets within the next 30 days, a good way to open up negotiations with the groups. If “good enough development” isn’t always made toward those goals inside six months of the order being signed, HHS will impose maximum favored country pricing on pills through rulemaking or “other aggressive measures,” according to the order.
But Anderson stated it would probably take a long way for the government and drugmakers to agree on a price. Under a provision of the Inflation Reduction Act, Medicare and drug producers commonly take six months to 12 months to negotiate prices.
He added, “Why might any drug company ever lower their fees voluntarily?” Anderson referred to that the order no longer provides info on the precise moves the administration could take in opposition to drugmakers who don’t agree, so the incentives are unclear.
The Department of Justice and Federal Trade Commission may also take action against “anti-competitive movements” that keep costs excessive in the U.S., White House officials said.
“There can be an expectation that those prices need to come down. And then if they don’t, we can be looking at our numerous coverage levers that can be used to pressure the ones expenses down,” one reputable stated. ‘We honestly are going to get a higher deal.’”
The order also directs the Food and Drug Administration to recall expanding imports from different advanced nations beyond Canada. Trump signed a separate executive order in April directing the FDA to improve the process by which states can apply to import lower-cost drugs from Canada, among other actions intended to lower drug prices.
How and when will the drug policy impact patients?
The Trump administration claims that some drug expenses will fall by up to 90% “nearly straight away.”
White House officials also stated the management will have a specific consciousness on pills which have the “biggest disparities and largest prices,” which could encompass popular weight loss and diabetes remedies known as GLP-1 tablets.
But experts raised doubts on whether or not the administration can reduce prices extensively, as it’s still unclear which pills and nations can be centered, and whether different countries and drugmakers will comply.
“We don’t know the list of nations covered,” said Tricia Neuman, government director for this system on Medicare coverage at KFF, a health coverage studies group. “Their pricing would make a huge distinction in what our expenses would be, which could then affect get right of entry in the U.S.”
In Anderson’s view, the order as written received’t be powerful at reducing drug costs.
“It’s a remarkable idea to pay international fees, but it’s how you get to put into force. There is no info and capacity to effectuate it,” he said.
Additionally, Gostin stated that Americans will probably no longer see price discounts “in the foreseeable future.” Still, AARP, which advocates for older Americans, thanked Trump for issuing the order in a declaration on Monday.
“It’s safe to say that we are enthusiastic about any attempts to assist deliver down prescription drug costs,” stated Leigh Purvis, the prescription drug coverage main in AARP’s Public Policy Institute. “This method is surprisingly understandable to the general public due to the fact, I suppose, there’s a fashionable knowledge that America pays the best prescription drug costs internationally.”
She added that the “satan is inside the details, and that’s what we’re searching forward to seeing more of.”
How will it impact the pharmaceutical industry?
The pharmaceutical industry has argued that a “most desired country” coverage will harm its profits and capacity to research and develop new tablets. Last week, PhRMA even envisioned that Trump’s suggestion – if carried out to the Medicaid software in particular – ought to value drugmakers as a lot as $1 trillion over a decade.
But Monday’s executive order appears to be “extra of a headline chance” than the sweeping shift for the pharmaceutical enterprise many had feared, BMO Capital Markets analyst Evan Seigerman stated in a note on Monday.
He said that the plan’s uncertain route of motion “may be greater rhetoric than actual implementable policy” in reference to it. Seigerman said that Trump is regarded to be extremely sympathetic to U.S. Producers, with the president arguing that European international locations are not supporting drug studies and development because of their lower expenses.
In the absence of extra facts concerning the management’s potential retaliatory movements, Anderson said that the pharmaceutical enterprise can be exhaling a “sigh of relief today.” Trump’s order shows that it’s ultimately voluntary for drugmakers to decrease fees and, finally, profits, so “he did not endorse something obligatory and without a doubt has teeth here.”
Still, while PhRMA agreed with Trump’s choice to goal different countries, the organization emphasised that “importing foreign fees from socialist countries might be a horrific deal for American patients and people.
“It would mean many fewer remedies and treatment plans and would jeopardize the loads of billions our member groups are making plans to put money into America, threatening jobs, hurting our financial system, and making us more reliant on China for innovative medicines,” the group said in a declaration.
What could work instead?
Some analysts and professionals stated Trump ought to put into effect his most favored kingdom coverage through an existing device to push down drug prices: Medicare drug price negotiations.
One of the most vital elements of the Inflation Reduction Act that was passed by the Biden administration offers Medicare the authority to negotiate positive prescription drug expenses with manufacturers. The federal software is currently inside the 2d spherical of negotiations with pharmaceutical companies. The Trump administration ought to use the “maximum favored nation” price for a given drug as the initial provide to manufacturers at the beginning of negotiations, Anderson stated.
“You’d be starting the negotiation at an even decrease charge than they’ve inside the beyond,” he said, including that it’d now not require any help from Congress.
JPMorgan analysts delivered that “we see a clearer pathway for the management to put in force [the most favored nation policy] at a smaller scale through Medicare IRA price negotiations, in which the impact could be restricted to a small variety of medicine” and make the hit to drugmaker profits greater gradual