President Trump takes decisive action to lower prescription drug prices for Americans through a “most favored nation” policy that will ensure Medicare won’t pay more for medications than other wealthy countries do.
Quick Takes
- Trump’s executive order aims to ensure American patients pay no more for prescription drugs than residents of other affluent nations.
- The policy targets Medicare Part B drugs with potential savings of over $85 billion over seven years.
- The plan builds on Trump’s previous efforts that were halted by pharmaceutical industry lawsuits in 2020.
- The order addresses middlemen in the pharmaceutical supply chain to improve transparency and cut costs.
- Americans strongly support prescription drug reforms, with over 75% finding medication costs unaffordable according to recent polls.
America First Drug Pricing Reform
President Trump is prepared to sign a new executive order establishing a “most favored nation” pricing model for Medicare-covered drugs. The groundbreaking approach would mandate that the United States government pay no more than the lowest prices paid by other wealthy nations, directly addressing the alarming disparity in drug costs. Currently, American patients face prescription drug prices that can be up to ten times higher than those in other developed countries, placing an unnecessary financial burden on both taxpayers and seniors who rely on these medications for their health and wellbeing.
The policy is part of a comprehensive strategy to prioritize Americans’ healthcare needs while fostering competition and transparency in the pharmaceutical market. According to White House sources, this renewed effort builds upon previous actions to encourage the development of generic and biosimilar medications and expand access to lower-cost imported drugs. The initiative represents Trump’s commitment to correcting course after what his administration describes as a reversal of progress under the previous administration.
Building on Previous Efforts
This isn’t the first time President Trump has pursued aggressive pricing reforms for prescription drugs. In 2020, his administration launched a similar initiative that was ultimately halted by a federal judge following legal challenges from the pharmaceutical industry. The original plan targeted Medicare Part B drugs specifically and was projected to save American taxpayers more than $85 billion over a seven-year period. Despite the previous setback, the president remains determined to deliver on his promise to lower drug costs for all Americans.
“Known as the ‘pill penalty,’ this discrepancy threatens to distort innovation by pushing investment towards expensive biological products, which are often indicated to treat rarer diseases, and away from small molecule prescription drugs, which are generally cheaper and treat larger patient populations.” Donald J. Trump
The new executive order will aim to optimize federal healthcare programs to provide affordable access to prescription drugs while improving the Medicare Drug Price Negotiation Program. Key components include enhancing transparency and prioritizing high-cost medications that place the greatest strain on the healthcare system. Additionally, the administration seeks to stabilize and reduce Medicare Part D premiums while aligning the treatment of small molecule drugs with biological products to prevent market distortions.
Challenging Pharmaceutical Middlemen
A significant aspect of Trump’s drug pricing strategy involves reevaluating the role of middlemen in the pharmaceutical supply chain. Pharmacy Benefit Managers (PBMs) have faced mounting criticism for potentially inflating drug prices despite their stated purpose of negotiating discounts. By promoting competition and transparency within this segment of the industry, the administration aims to eliminate hidden fees and pricing schemes that ultimately hurt American consumers and drive up costs throughout the healthcare system.
The executive order also addresses the costly care burden for seniors by proposing regulations to prevent the shifting of drug administration to more expensive healthcare settings. This patient-centered approach seeks to reduce out-of-pocket expenses while ensuring access to life-saving medications like insulin and epinephrine. Further reforms include accelerating the approval process for generic and biosimilar alternatives and improving the pathway for reclassifying prescription drugs as over-the-counter options when appropriate.
Strong Public Support Amid Industry Opposition
Health policy experts broadly support the approach of price matching with other countries, though many anticipate significant resistance from the pharmaceutical industry. Public opinion strongly favors such reforms, with a Kaiser Family Foundation poll revealing that more than three in four American adults find medication costs unaffordable. This widespread concern crosses political lines and creates a compelling mandate for meaningful action to address the pricing disparities that have persisted for decades.
While the pharmaceutical industry has suggested focusing regulatory attention on PBMs rather than manufacturers, President Trump’s comprehensive approach addresses multiple factors contributing to high drug prices. By streamlining drug importation programs, improving transparency in fee disclosures, and combating anti-competitive behavior by manufacturers, the administration’s strategy represents a multi-faceted approach to a complex problem that has frustrated American patients and policymakers alike for generations.
