President Donald Trump relived on Monday a controversial policy that aims to reduce the costs of medicines by linking the amount that the government pays for some medications at the lowest prices abroad.
Trump signed an executive order that includes several different actions to renew that effort, known as the “most favored nation” policy. Trump did not refer to specific nations, but said he would go to other developed countries because “there are some countries that need additional help, and that is fine.”
“Basically, what we are doing is matching,” Trump said during a press event on Monday. “We are going to pay the lowest price in the world. We will obtain whoever is paying the lowest price, that is the price we are going to get.”
But White House officials did not reveal which medications the order will apply. They said that Monday's announcement will be broader than a similar policy that Trump tried to boost during his first mandate, which was only applied to drugs from Medicare B.
The officials added that the administration will have a particular approach to the medications that have the “greater disparities and greater expenses”, which could include popular weight loss and diabetes treatments called GLP-1 medications.
It is not clear how effective the policy will be to reduce costs for patients. In a publication on social networks on Monday, Trump said that drug prices will be reduced by “59%, in addition!”
But Trump during the press event said that drug prices can fall even more, between 59%and 80%, or “I suppose even 90%.”
The actions of American drug manufacturers were mixed on Monday. Actions of Merck increased more than 4%, while shares of Pfizer and Amgen rose more than 2%
How will Trump's drug pricing order work
President Donald Trump, together with the Secretary of Health and Human Services, Robert F. Kennedy Jr., speaks during a press conference in the Roosevelt room of the White House on May 12, 2025, in Washington, DC.
Andrew Harnik | Getty images
Part of the order points to the nations abroad, which have more power to negotiate the prices of medicines with pharmaceutical companies.
“As of today, the United States will no longer subsidize the medical care of foreign countries, which is what we were doing,” Trump said, adding that the United States “will no longer tolerate the deposit and increase in the prices of the great pharmacy.”
He added that “it was really the countries that forced the great pharmaceuticals to do things that, frankly, I am not sure they really felt comfortable.”
The Order orders to the Office of the Commercial Representative of the United States and the Department of Commerce to take energetic measures against “unreasonable and discriminatory policies” in foreign countries that “suppress” the prices of medicines abroad, officials said.
“We are going to work to make sure that countries are not unfair in their negotiations with pharmaceutical companies, right?” an official said. Medication manufacturers “constantly complain” for being put “in an unsustainable situation when in these negotiations” because those companies have generally negotiating drug discounts with entire countries, the official added.
Unlike the US, several foreign countries offer universal health coverage where the government is the only payer, which gives it a significant influence to negotiate or establish drug prices.
White House officials said they expect drug manufacturers to provide discounts in all areas to “correspond” the actions that the Trump administration is taking to address prices abroad.
Trump's order also directs the Secretary of the Department of Health and Human Services to encourage drug manufacturers to offer “more favored prices of the nation” in “direct sales to consumers” of their medicines.
“We are going to eliminate intermediaries and we will facilitate the direct sale of drugs at the most favorite price of the nation, directly to the American citizen,” Trump said.
Within 30 days, the secretary will also have to establish clear objectives for price reductions in all US markets., According to officials. That will open a round of negotiations between HHS and the pharmaceutical industry, the authorities said, without providing exact details about the nature of these conversations.
If the “adequate progress” is not carried out towards those price objectives, the HHS secretary, Robert F. Kennedy Jr., will impose the most favorite nation prices in drugs through regulations.
The order also directs the food and medicines administration to consider expanding imports from other nations developed beyond Canada. Trump signed a separate executive order in April that ordered the Food and Medicines Administration to improve the process by which states may request importing medications with lower cost of Canada, among other actions aimed at reducing medications prices.
Monday's order also directs the Department of Justice and the Federal Commerce Commission to aggressively enforce “anti -competitive actions” that maintain high prices in the US.
The Commerce Department will also consider export restrictions that “combustgan and allow that low price abroad.”
It is Trump's last effort to try to control the prices of prescription drugs in the United States, which are two to three times higher than those of other nations developed, and up to 10 times more than in certain countries, according to Rand Corporation, a group of public policy experts.
The order is a blow to the pharmaceutical industry, which is already being prepared for Trump planned rates about prescription medications. Medication manufacturers have argued that the policy of the “most favored nation” would harm their profits and, ultimately, their ability to investigate and develop new medications.
White House officials argued that pharmaceutical companies will continue to earn money after price cuts if they realize that the United States “will not only pay for innovation” and if prices increase abroad to obtain additional income there.
Medication manufacturers “must follow agreements in which they are financially rewarded to the value they are providing to other nations, health systems,” said an official.
“Other countries should also pay research and development. It is for their benefit,” Trump added on Monday.
Politics could help patients reducing recipe medicines costs, which is a mental problem for many Americans. According to a 2022 KFF survey, more than three out of four adults in the US.
The industry also pressed similar Trump plans during its first mandate. He tried to boost politics in the last months of that mandate, but a federal judge arrested the effort after a demand for the pharmaceutical industry. The Biden administration terminated that policy.
White House officials initially pressed the Republicans of the Congress to include a “most favored nation” provision in the main draft reconciliation law that they plan to approve in the coming months, but the policy would have specifically directed the drug costs of Medicaid, Political reported at the beginning of this month. Several members of the Republican party opposed that measure.
The effects on patients, companies
The largest commercial group in the industry, PHRMA, estimated that Trump's Medicaid proposal could cost drug manufacturers of up to $ 1 billion for a decade.
Some health policy experts have said that a drug policy of the “most favored nation” may not be effective in reducing medication costs.
For example, USC experts said policy “cannot undo the basic economy of the world drug market”, where 70% of pharmaceutical profits worldwide come from the United States.
“Facing a choice between deep cuts in their US prices or the loss of markets abroad weakly profitable, we can expect many companies to withdraw from foreign markets as soon as possible,” experts said in a report in April.
That will leave Americans who pay the same amount for medications, drug manufacturers with lower profits and future generations of patients with less innovation, they said.
“In short, everyone loses,” experts said.
Other experts have said that another legal fight with the pharmaceutical industry could prevent policy from taking effect.
But even if the pharmaceutical industry delays Trump's executive order, its administration still has another tool to reduce medication prices: Medicare medication prices negotiations.
It is a key provision of the inflation reduction law that will medicate the power to negotiate certain drug prices prescribed with manufacturers for the first time in history.
Last month, Trump proposed a change to that policy that drug manufacturers have looked for a long time. Legislators on both sides of the hall could be receptive to the idea, which proposes changing rules that differentiate between small molecule medications and biological medications.
Trump said last week that he plans to announce tariffs on imported medicines to the US in the next two weeks. These planned levies are aimed at promoting the manufacture of domestic drugs.
The drug addicts, including Eli Lilly and PfizerThey are going back those potential tasks. Some companies have questioned whether the rates are necessary, since several of them have already announced new manufacturing and research and development investments of the US. Since Trump assumed the position.
Even so, Trump doubled the efforts to redo drug manufacturing last week. He signed an executive order that rationalizes the way for drug manufacturers to build new production sites.
Caplan said that even if the pharmaceutical industry delays the executive order, the administration still has another tool at its disposal: Medicare medication price negotiations.
