Trump Moves to Lower Prescription Drug Prices

WASHINGTON — President Donald Trump on Monday announced his intention to try to resurrect a controversial policy from his first administration in a bid to reduce the cost of some prescription drugs in the United States by linking their prices to those paid abroad.

The policy, spelled out in an executive order Trump signed Monday morning, is premised on the notion of the “most-favored nation status” — essentially a demand that one nation be given treatment equal to or better than any other country.

Trump signed a similar executive order in the final weeks of his previous presidency, but a court order later blocked the rule from going into effect under President Joe Biden’s administration.

In a post to Truth Social Sunday night, Trump said that as a result of his renewed effort, “prescription drug and pharmaceutical prices will be reduced, almost immediately, by 30% to 80%.”

He also said drug prices will rise throughout the world in order to “equalize and, for the first time in many years, bring fairness to America.”

On Monday he warned that drug manufacturers who don’t reduce their prices accordingly could be subject to tighter enforcement of anticompetitive practices.

“I have great respect for the pharmaceutical industry, I really do,” Trump said at a press conference held minutes before he left for a long-anticipated trip to the Middle East, the first extended foreign trip of his second term.

“I’m not knocking the drug companies. I have great respect for these companies and the people that run them, and I think they did one of the greatest jobs in history for their companies … convincing people for many years that this was a fair system.

“And nobody figured it out. For years. But I figured it out,” Trump said.

The president said historically drug manufacturers have discounted their products to gain access to foreign markets and then “subsidized” those discounts through higher prices charged in America.

They “got away” with the scheme, Trump said, by convincing everyone, regulators included, that the higher prices paid by American consumers were due to “research and development costs … that for no reason whatsoever, had to be borne by America alone. This despite their benefitting from generous research subsidies and enormous health care spend by the federal government.

“That means American patients were effectively subsidizing socialist health care systems in Germany and in all parts of the European Union,” he said. “Not anymore.”

Specifically, the executive order directs administration officials to communicate price targets to pharmaceutical manufacturers to ensure that the United States “gets the best deal” on prescription drugs.

It goes on to direct U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes here.

The order also directs the Health Secretary Robert F. Kennedy Jr. to establish a mechanism through which American patients can buy their drugs directly from manufacturers that sell to Americans at a “most-favored-nation” price, bypassing middlemen.

If these steps fail to produce the desired results, the order directs Kennedy to proposed rules that impose most-favored-nation pricing; and to take other “aggressive measures” to significantly reduce the cost of prescription drugs.”

Joining Trump at the press conference were Kennedy, Centers for Medicare and Medicaid Services Director Dr. Mehmet Oz, National Institutes of Health Director Jay Bhattacharya and Food and Drug Administration Commissioner Marty Makary.

“This is an extraordinary day,” Kennedy said. “As you know, I grew up in the Democratic Party, and every major Democratic leader for 20 years has been making this promise to the American people. 

“This was the fulcrum of Bernie Sanders’ runs for presidency, that he was going to eliminate the discrepancy between Europe and the United States, but as it turns out, none of them were doing it and it’s one of these promises that politicians make to their constituents, knowing that they’ll never do it. … Nobody wanted to do anything because it was radioactive.”

Sanders, I-Vt., ranking member of the Senate Committee on Health, Education, Labor and Pensions, responded by saying he agreed with Trump that it is an “outrage that the American people pay, by far, the highest prices in the world for prescription drugs.”

“It’s beyond unacceptable,” he said.

“But let’s be clear, the problem is not that the price of prescription drugs is too low in Europe and Canada. The problem is that the extraordinarily greedy pharmaceutical industry made over $100 billion in profits last year by ripping off the American people,” Sanders said.

“Further, as Trump well knows, his executive order will be thrown out by the courts,” he continued. “If Trump is serious about making real change … he will support legislation I will soon be introducing to make sure we pay no more for prescription drugs than people in other major countries.”

Sanders added: “If Republicans and Democrats come together on this legislation, we can get it passed in a few weeks.”

Also taking a dim view of Trump’s executive order was the Pharmaceutical Research and Manufacturers of America, an industry trade group.

“To lower costs for Americans, we need to address the real reasons U.S. prices are higher: foreign countries not paying their fair share and middlemen driving up prices for U.S. patients,” said Stephen Ubl, the association’s CEO, in a statement.

Like Sanders, Ubl agreed with Trump to a degree, saying, “the administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines. U.S. patients should not foot the bill for global innovation.”

But he said the executive order fails to address a significant factor in what Americans pay for drugs — the intervention of pharmacy benefits managers.

“The U.S. is the only country in the world that lets PBMs, insurers and hospitals take 50% of every dollar spent on medicines,” Ubl said. “The amount going to middlemen often exceeds the price in Europe. Giving this money directly to patients will lower their medicine costs and significantly reduce the gap with European prices.

“Importing foreign prices from socialist countries would be a bad deal for American patients and workers,” he continued. “It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America — threatening jobs, hurting our economy and making us more reliant on China for innovative medicines.”

Both Trump and Kennedy asserted that Democrats — and specifically, former President Joe Biden — have done nothing about high drug prices.

In reality, it was the Democrats in Congress who passed the legislation — the Inflation Reduction Act of 2022 — to allow the government to negotiate on the price of some drugs in Medicare during the Biden administration.

The Senate passed the act by a vote of 51-50, with all Democrats voting in favor, all Republicans voting against, and Vice President Kamala Harris breaking the tie. Days later, the House passed the bill on a 220-207 vote, with all Democrats voting in favor and all Republicans voting against it.

But Trump, Kennedy and, later, Oz, all said that even with that legislation in hand, the Biden administration was only able to negotiate prices that were, on average, “78% higher than in 11 comparable countries.”

The prices negotiated by the Biden administration on 10 drugs last year — including widely used blood thinners and arthritis medications — do not take effect until 2026.

At the time they were announced, the Biden administration said if the new prices had been in effect a year earlier (in 2023), Medicare would have saved about $6 billion, cutting its drug expenditures by 22%.

Medicare’s Part D program covers most of the costs of prescription drugs that seniors take at home. About 9 million Part D beneficiaries took at least one of the first 10 medications subject to negotiations.

The legislation also delivered some immediate benefits to Medicare beneficiaries, including a $35 monthly cap on out-of-pocket costs for insulin and a $2,000 annual cap on patient costs for drugs taken at home.

Dan can be reached at [email protected] and @DanMcCue