Former President Donald Trump’s recently-released blueprint to reduce prescription drug prices in the U.S. is a start to addressing the problem. Most people think that this change could be revolutionary for the pharmaceutical industry. Under this approach, Trump would sign an executive order to prod drugmakers to adopt what are called “most favored nation prices.” This change will align U.S. drug prices with those abroad where medicines are cheaper. The administration’s announcement is a response to the growing public anger over sky-high drug prices. A new survey finds more than three-quarters of Americans find these costs to be prohibitive.
In a recent social media post, the former president doubled down on his new policy. He said it would produce a windfall drug price reduction of 59%, and then some! This bold assertion reflects his administration’s ongoing commitment to address the economic burden of high medication costs on American families. The executive order will direct the Secretary of the Department of Health and Human Services (HHS) to establish clear targets for price reductions across all markets within 30 days.
The “most favored nation” policy is an attempt to lower federal spending on select drugs. It accomplishes this through the process of comparing U.S. prices to those in other developed nations. This policy resurrection restores an unpopular initiative that Trump attempted (and failed) to get off the ground during his first term. A federal judge stopped it then after a successful lawsuit from the pharmaceutical industry. The Biden administration subsequently rescinded a similar policy, but Trump’s renewed effort suggests a return to aggressive measures aimed at controlling drug costs.
“For too long, foreign nations have been able to free ride off of the American people, and American patients forced to pay for too much for prescription drugs.” – White House official
U.S. prescription drug prices are egregiously high, two to three times higher than other developed countries. According to data from the Rand Corporation, certain medications cost up to ten times more in the U.S. than in nations with more favorable pricing structures. Consumers are seeing a huge financial impact. Yet a recent KFF poll from 2022 shows that most American adults say they can’t afford their medications.
However, as of today, this is all part of the same initiative. Trump may announce new tariffs on imported drugs within the next two weeks. These tariffs are designed to deter dependence on foreign markets, while promoting price decreases at home. The stock market has gotten a taste of the potential fallout these new tariffs might bring. Major U.S. drug manufacturers such as Eli Lilly, Pfizer, Merck and Johnson & Johnson had already seen their shares dip in premarket trading prior to Trump’s announcement.
Despite these challenges, the administration is bullish on enacting price decreases. Experts caution that the dark realities of the complex global drug marketplace should not be overlooked. A representative from USC stated, “can’t undo the basic economics of the global drug marketplace.” This negative sentiment underscores the public’s concern over predatory pricing practices. They worry that these tactics will drive some firms to exit unprofitable foreign markets, deepening shortages and reducing access to medicines abroad.
“The president is dead serious about [lowering drug prices].” – White House official
Three weeks ago Trump signed a new executive order. In April, he similarly told the Food and Drug Administration (FDA) to make it easier for states to import lower-cost drugs from Canada. This move aimed at leveraging external markets for better pricing options further underscores Trump’s administration’s commitment to tackling high drug costs.