President Donald Trump on Monday will revive a controversial coverage that goals to slash drug prices by tying the quantity the federal government pays for some medicines to decrease costs overseas, White Home officers stated.
Trump will signal an government order together with a number of totally different actions to resume that effort, often known as the “most favored nation” coverage. Trump didn’t seek advice from particular nations, however signaled that he would goal different developed international locations as a result of “there are some international locations that want some extra assist, and that is tremendous.”
“Principally, what we’re doing is equalizing,” Trump stated throughout a press occasion on Monday. “We’re going to pay the bottom worth there’s on the earth. We are going to get whoever is paying the bottom worth, that is the worth that we’ll get.”
However White Home officers didn’t disclose which drugs the order will apply to. They stated Monday’s announcement might be broader than the same coverage that Trump tried to push throughout his first time period, which solely utilized to Medicare Half B medicine.
Officers added that the administration could have a selected deal with medicine which have the “largest disparities and largest expenditures,” which may embody common weight reduction and diabetes therapies known as GLP-1 medicine.
It is unclear how efficient the coverage might be at decreasing prices for sufferers. In a social media submit on Monday, Trump claimed drug costs might be reduce by “59%, PLUS!”
However Trump throughout the press occasion claimed drug costs could fall much more, between 59% and 80%, or “I assume even 90%.”
Shares of U.S. drugmakers have been blended on Monday. Shares of Merck rose greater than 4%, whereas shares of Pfizer and Amgen climbed greater than 2%
How Trump’s drug pricing order will work
President Donald Trump, joined by Well being and Human Companies Secretary Robert F. Kennedy Jr., speaks throughout a press convention within the Roosevelt Room of the White Home on Might 12, 2025, in Washington, DC.
Andrew Harnik | Getty Photographs
A part of the order takes goal at nations overseas, which have extra energy to barter down drug costs with pharmaceutical corporations.
“Beginning at the moment, the USA will now not subsidize the well being care of overseas international locations, which is what we have been doing,” Trump stated, including the U.S. “will now not tolerate profiteering and worth gouging from Massive Pharma.”
He added that “it was actually the international locations that compelled Massive Pharma to do issues that, frankly, I am unsure they actually felt comfy doing.”
The order directs the Workplace of the U.S. Commerce Consultant and the Division of Commerce to crack down on “unreasonable and discriminatory insurance policies” in overseas international locations that “suppress” drug costs overseas, the officers stated.
“We’re going to be working to ensure that international locations aren’t being unfair of their negotiations with pharmaceutical corporations, proper?” one official stated. Drugmakers are “continuously complaining” about being put “in an untenable state of affairs when in these negotiations” as a result of these corporations sometimes need to dealer drug reductions with complete international locations, the official added.
In contrast to the U.S., a number of overseas international locations provide common well being protection the place the federal government is the only payer, giving it important leverage to barter or set drug costs.
White Home officers stated they count on drugmakers to supply reductions throughout the board to “reciprocate” the actions the Trump administration is taking to deal with costs overseas.
Trump’s order additionally directs the Secretary of the Division of Well being and Human Companies to encourage drugmakers to supply “most favored nation costs” on “direct-to-consumer gross sales” of their medicines.
“We will reduce out the middlemen and facilitate the direct sale of medicine on the most favourite nation worth, on to the American citizen,” Trump stated.
Inside 30 days, the secretary may even need to set clear targets for worth reductions throughout all markets within the U.S., in line with the officers. That can open up a spherical of negotiations between HHS and the pharmaceutical business, officers stated, not offering precise particulars on the character of these talks.
If “ample progress” will not be made in direction of these worth targets, HHS Secretary Robert F. Kennedy Jr. will impose essentially the most favored nation pricing on medicine by rulemaking.
The order additionally directs the Meals and Drug Administration to contemplate increasing imports from different developed nations past Canada. Trump signed a separate government order in April directing the Meals and Drug Administration to enhance the method by which states can apply to import lower-cost medicine from Canada, amongst different actions supposed to decrease drug costs.
Monday’s order additionally directs the Division of Justice and Federal Commerce Fee to aggressively implement “anti-competitive actions” that hold costs excessive within the U.S.
The Division of Commerce may even take into account export restrictions that “gasoline and allow that low pricing overseas.”
It’s Trump’s newest effort to attempt to rein in U.S. prescription drug costs, that are two to 3 occasions larger on common than these in different developed nations – and as much as 10 occasions greater than in sure international locations, in line with the Rand Company, a public coverage assume tank.
The order is a blow to the pharmaceutical business, which is already bracing for Trump’s deliberate tariffs on pharmaceuticals. Drugmakers have argued that the “most favored nation” coverage would damage their income and in the end, their capacity to analysis and develop new medicines.
White Home officers contended that pharmaceutical corporations will proceed to make cash after the worth cuts in the event that they understand that the U.S. “alone will not be going to pay for innovation” and in the event that they enhance costs overseas to get extra revenues there.
Drugmakers “ought to pursue offers the place they get financially rewarded commensurate the worth that they’re offering to different nations, well being techniques,” one official stated.
“Different international locations ought to pay analysis and growth too. It is for his or her profit,” Trump added on Monday.
The coverage may assist sufferers by decreasing prescription medicine prices, which is a matter prime of thoughts for a lot of Individuals. Greater than three in 4 adults within the U.S. say the price of drugs is unaffordable, in line with a KFF ballot from 2022.
The business additionally lobbied in opposition to comparable Trump plans throughout his first time period. He tried to push the coverage by within the last months of that time period, however a federal decide halted the hassle following a lawsuit from the pharmaceutical business. The Biden administration then rescinded that coverage.
White Home officers initially pressed congressional Republicans to incorporate a “most favored nation” provision within the main reconciliation invoice they plan to move within the coming months, however the coverage would have particularly focused Medicaid drug prices, Politico reported earlier this month. A number of GOP members opposed that measure.
The consequences on sufferers, corporations
The business’s largest commerce group, PhRMA, estimated that Trump’s Medicaid proposal may value drugmakers as a lot as $1 trillion over a decade.
Some well being coverage specialists have stated a “most favored nation” drug coverage is probably not efficient at decreasing medicine prices.
For instance, USC specialists stated the coverage “cannot undo the fundamental economics of the worldwide drug market,” the place 70% of pharmaceutical income worldwide come from the U.S.
“Dealing with a selection between deep cuts of their U.S. pricing or the lack of weakly worthwhile abroad markets, we are able to count on many companies to tug out from abroad markets at their earliest alternative,” specialists stated in a report in April.
That can depart Individuals paying the identical quantity for drugs, drugmakers with decrease income and future generations of sufferers with much less innovation, they stated.
“In sum, everybody loses,” the specialists stated.
Different specialists have stated one other authorized combat with the pharmaceutical business may forestall the coverage from taking impact.
However even when the drug business pushes again on Trump’s government order, his administration nonetheless has one other software to push down drug costs: Medicare drug worth negotiations.
It is a key provision of the Inflation Discount Act that provides Medicare the ability to barter sure prescription drug costs with producers for the primary time in historical past.
Trump final month proposed a change to that coverage that drugmakers have lengthy sought. Lawmakers on either side of the aisle could possibly be receptive to the concept, which proposes altering guidelines that differentiate between small-molecule medicine and biologic medicines.
Trump final week stated he plans to announce tariffs on medicines imported into the U.S. inside the subsequent two weeks. These deliberate levies goal to spice up home drug manufacturing.
Drugmakers, together with Eli Lilly and Pfizer, are pushing again on these potential duties. Some corporations have questioned whether or not the tariffs are obligatory, provided that a number of of them have already introduced new U.S. manufacturing and analysis and growth investments since Trump took workplace.
Nonetheless, Trump final week doubled down on efforts to reshore drug manufacturing. He signed an government order that streamlines the trail for drugmakers to construct new manufacturing websites.
Caplan famous that even when the drug business pushes again on the chief order, the administration nonetheless has one other software at its disposal: Medicare drug pricing negotiations.