President Donald Trump has announced a plan to lower prescription drug prices in the United States by up to 80 percent.
The president signed the Most Favored Nation Drug Pricing executive order at the White House on May 12.
The plan requires drug makers to offer the lowest price found in other developed countries for certain high-cost prescription medications.
“The United States will no longer subsidize the health care of foreign countries,” Trump said before signing the executive order. “And we will no longer tolerate profiteering and price gouging from Big Pharma.”
Americans pay more than three times the price for brand-name drugs that comparable nations pay, according to the White House, even after accounting for discounts provided by manufacturers within the United States.
Trump dismissed those concerns, saying the policy would force other developed countries to pay their fair share for prescription drugs, providing adequate profit for manufacturers to reinvest in research and development.
Americans pay higher prices for prescription drugs than any nation in the world, according to a 2024 report from the Department of Health and Human Services (HHS).
The United States has about 4 percent of the world’s population but accounts for more than two-thirds of global pharmaceutical profits, according to Trump.
“American patients were effectively subsidizing socialist health care systems in ... all parts of the European Union,” Trump said.
The order is similar to a seven-year trial program instituted by Trump in 2020, which applied only to drugs purchased through Medicare Part B. That plan faced legal challenges and was rescinded by President Joe Biden shortly after he took office.
Trump’s current policy directs the health secretary to facilitate direct-to-consumer sales when appropriate, ensuring that manufacturer discounts are passed on to consumers rather than benefiting intermediaries.
At the same time, Trump said the United States would assist pharmaceutical companies in negotiations with other countries, which sometimes dictate pricing to the manufacturers.
Health Secretary Robert F. Kennedy Jr. credited Trump for taking on the pharmaceutical lobby, which he called the most powerful in the country.
“This was an issue that people talked about. Nobody wanted to do anything because it was radioactive. They knew you couldn’t get it by Congress. We now have a president who is a man of his word,” Kennedy said.
Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, predicted “withering criticism and lobbying” following the announcement.
Oz pointed out that Americans pay much higher prices than in other countries, even for drugs whose prices were lowered under the Inflation Reduction Act.
Dr. Martin Makary, commissioner of the Food and Drug Administration, called the new policy “transformative.”
“The fundamental problem in health care is that we’ve had non-competitive markets,” he said.
The order directs the U.S. trade representative and secretary of commerce to ensure that foreign countries are not engaged in unfair practices that undercut market pricing, which drives higher prices in the United States.
The order also instructs administration officials to communicate target prices to pharmaceutical manufacturers.
While Trump said he expects pharmaceutical companies to voluntarily offer their lowest price to U.S. customers, HHS will propose new rules to impose the plan on those who do not comply.
Also, HHS will create a method for U.S. patients to buy their drugs directly from manufacturers who sell at the “Most Favored Nation Price,” ensuring that all discounts are passed on to consumers rather than being retained by middlemen.
