On May 11th, US President Trump announced that he would sign an executive order to “almost immediately” lower prescription drug prices. Taking to the social media platform Truth Social, Trump stated, “I am pleased to announce that tomorrow morning at 9 o’clock, I will sign one of the most impactful executive orders in our nation’s history.”
According to Trump, through the implementation of the “Most Favored Nation Policy,” the United States will pay the same price as the lowest-paying country globally for prescription drugs and medications. This will result in a decrease in drug prices by 30% to 80%, while prices in other parts of the world will increase to achieve balance, bringing true fairness to the US for the first time in many years.
The primary beneficiaries of this measure are individuals enrolled in the Medicare Part B program, a monthly premium federal insurance plan providing specific healthcare coverage. The “Most Favored Nation Drug Pricing Policy” requires pharmaceutical companies to offer Medicare Part B the same price as the lowest price in specific peer countries for a range of high-priced prescription drugs.
Trump criticized the pharmaceutical industry in his statement, accusing these companies of making the American people bear the majority of research and development costs over the years.
He wrote, “Pharmaceutical companies have always claimed that those are research and development costs, and all these costs, past and present, have been unreasonably borne solely by the American ‘suckers.’ Previously, campaign donations indeed could yield miraculous effects, but they can’t buy me, and they can’t buy the Republican Party. We will do the right thing, something the Democratic Party has been fighting for over the years.”
In a report by the US Department of Health and Human Services (HHS) in 2024, it was found that Americans pay higher prescription drug prices compared to other countries worldwide, averaging more than double the prices in other countries. The disparity is even more significant for the most expensive drugs.
The executive order signed by Trump this time effectively reinstates the drug pricing reform plan he proposed in 2020. The plan had already entered the rule-making process but was suspended after he left office.
Under the current plan, if pharmaceutical companies sell listed drugs in specific “peer countries,” they must supply them to Medicare Part B at the “adjusted lowest price.” These adjustments include factors such as differences in purchase volume and Gross Domestic Product (GDP).
Trump’s original plan proposed in 2020 was a seven-year pilot program. According to estimates from the Centers for Medicare and Medicaid Services’ Office of the Actuary, this plan was projected to save the federal government, state governments, and Medicare beneficiaries $87.8 billion during the trial period.
However, the plan faced four lawsuits that year and was ultimately blocked by a nationwide preliminary injunction, failing to be implemented as scheduled. Apart from Trump’s executive order, there have been some bipartisan lawmakers independently advocating for similar “Most Favored Nation” drug pricing policies.
On May 5th, Republican Senator Josh Hawley and Democratic Senator Peter Welch jointly introduced a bill, prohibiting pharmaceutical companies from selling any prescription drugs in the US at prices higher than the average prices in Canada, France, Germany, Japan, Italy, and the UK.
The proposal stipulates that if a pharmaceutical company violates this, they will be fined an amount ten times the difference between the US selling price and the average price of the above-mentioned countries for each unit of the drug sold.
Hawley stated that the bill aims to continue the spirit of Trump’s 2020 drug pricing plan. In a joint statement with Welch, Hawley said, “This bipartisan bill will continue our efforts to end the market structure that favors big pharmaceutical companies, making prescription drug prices affordable again and ensuring that Americans can access the healthcare they need.”
Welch added, “No one should be forced to choose between buying medication and putting food on the table.” He pointed out that drug prices in the US are up to five times higher than in other countries.