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 mentioned.
Trump will signal an government order together with a number of totally different actions to resume that effort, referred to as the “most favored nation” coverage.
“For too lengthy, overseas nations have been in a position to free experience off of the American folks, and American sufferers pressured to pay for an excessive amount of for prescribed drugs,” one official instructed reporters on Monday.
“The president is useless severe about reducing drug costs,” they mentioned.
US President Donald Trump participates in a celebration of navy moms within the East Room of the White Home in Washington, DC, on Might 8, 2025.
Jim Watson | AFP | Getty Photographs
Shares of U.S. drugmakers dropped in premarket buying and selling Monday forward of the official announcement. Eli Lilly fell greater than 5%, whereas Pfizer, Merck and Johnson & Johnson dropped greater than 2%.
However White Home officers didn’t disclose which medicines the order will apply to. They mentioned Monday’s announcement will probably be broader than an analogous coverage that Trump tried to push throughout his first time period, which solely utilized to Medicare Half B medication.
Officers added that the administration can have a selected concentrate on medication which have the “largest disparities and largest expenditures,” which might embrace common weight reduction and diabetes therapies known as GLP-1 medication.
It is unclear how efficient the coverage will probably be at reducing prices for sufferers. In a social media submit on Monday, Trump claimed drug costs will probably be lower by “59%, PLUS!”
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 mentioned.
“We’re going to be working to ensure that international locations aren’t being unfair of their negotiations with pharmaceutical corporations, proper?” one official mentioned. Drugmakers are “continuously complaining” about being put “in an untenable state of affairs when in these negotiations” as a result of these corporations usually should dealer drug reductions with total international locations, the official added.
Not like 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 vital leverage to barter or set drug costs.
White Home officers mentioned they count on drugmakers to offer 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 Providers to encourage drugmakers to supply “most favored nation costs” on their medicines.
Inside 30 days, the secretary may even should set clear targets for value reductions throughout all markets within the U.S., in response to the officers. That can open up a spherical of negotiations between HHS and the pharmaceutical trade, officers mentioned, not offering actual particulars on the character of these talks.
If “ample progress” will not be made in direction of these value targets, HHS Secretary Robert F. Kennedy Jr. will impose probably the most favored nation pricing on medication by rulemaking.
The order additionally directs the Meals and Drug Administration to think about 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 medication from Canada, amongst different actions meant to decrease drug costs.
It 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 think about 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 a few instances increased on common than these in different developed nations – and as much as 10 instances greater than in sure international locations, in response to the Rand Company, a public coverage assume tank.
The order is a blow to the pharmaceutical trade, which is already bracing for Trump’s deliberate tariffs on prescribed drugs. Drugmakers have argued that the “most favored nation” coverage would damage their earnings and finally, their capacity to analysis and develop new medicines.
However the coverage might assist sufferers by reducing prescription medicine prices, which is a matter high of thoughts for a lot of People. Greater than three in 4 adults within the U.S. say the price of medicines is unaffordable, in response to a KFF ballot from 2022.
The trade additionally lobbied towards related 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 choose halted the trouble following a lawsuit from the pharmaceutical trade. 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.
How Trump’s order might have an effect on sufferers, corporations
The trade’s largest commerce group, PhRMA, estimated that Trump’s Medicaid proposal might value drugmakers as a lot as $1 trillion over a decade.
Some well being coverage specialists have mentioned a “most favored nation” drug coverage might not be efficient at reducing medicine prices.
For instance, USC specialists mentioned the coverage “cannot undo the fundamental economics of the worldwide drug market,” the place 70% of pharmaceutical earnings worldwide come from the U.S.
“Dealing with a alternative 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 drag out from abroad markets at their earliest alternative,” specialists mentioned in a report in April.
That can depart People paying the identical quantity for medicines, drugmakers with decrease earnings and future generations of sufferers with much less innovation, they mentioned.
“In sum, everybody loses,” the specialists mentioned.
Different specialists have mentioned one other authorized combat with the pharmaceutical trade might forestall the coverage from taking impact.
However even when the drug trade pushes again on Trump’s government order, his administration nonetheless has one other device to push down drug costs: Medicare drug value 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 each side of the aisle may very well be receptive to the concept, which proposes altering guidelines that differentiate between small-molecule medication and biologic medicines.
Trump final week mentioned he plans to announce tariffs on medicines imported into the U.S. inside the subsequent two weeks. These deliberate levies intention 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 crucial, on condition that a number of of them have already introduced new U.S. manufacturing and analysis and improvement 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 trade pushes again on the manager order, the administration nonetheless has one other device at its disposal: Medicare drug pricing negotiations.
