On Monday, President Donald Trump signed a major executive order setting a 30-day deadline for drugmakers to lower the cost of prescription drugs in the U.S. or face new limits on what the government will pay.
The order directs the Department of Health and Human Services, led by Robert F. Kennedy Jr., to negotiate new drug prices. If no agreement is reached, a new rule will be introduced that will link the U.S. drug prices to those paid by other countries.
“We’re going to equalize,” Trump said at a press conference. “We’re all going to pay the same. We’re going to pay what Europe pays.”
It’s not clear what impact this order will have on Americans with private health insurance. The government has more control over drug prices for Medicare and Medicaid patients.
Medicare, which covers about 70 million older Americans, and Medicaid, which covers nearly 80 million low-income and disabled Americans, spend billions on prescription drugs each year.
Before the signing, the main pharmaceutical lobby opposed Trump’s plan, calling it a “bad deal” for American patients. Drug companies argue that limiting their profits could hurt research and development for new medicines.
“Importing foreign prices will cut billions of dollars from Medicare with no guarantee that it helps patients or improves their access to medicines,” said Stephen J. Ubl, president of PhRMA. “It jeopardizes the hundreds of billions our member companies are planning to invest in America, making us more reliant on China for innovative medicines.”
Trump’s plan to base Medicare drug prices on the “most favored nation” rule has been controversial since he first proposed it. He signed a similar order late in his first term, which aimed to lower prices for some drugs given in doctor’s offices, such as cancer treatments.
This earlier attempt faced problems, including a court order blocking the rule under President Joe Biden’s administration. The pharmaceutical industry argued that it would let foreign governments decide drug prices in the U.S.
Trump defended the pharmaceutical companies but blamed other countries for the high prices in the U.S. during his speech on Monday. He was joined by Kennedy, Dr. Mehmet Oz from Medicare and Medicaid Services, Dr. Marty Makary from the FDA, and Dr. Jay Bhattacharya from the National Institutes of Health.
Trump also warned pharmaceutical companies with the threat of federal investigations into their practices and opening the U.S. drug market to more imported medicines.
Donald Trump signs an executive order related to drug prices“The pharmaceutical companies make most of their profits from America,” Trump said. “That’s not a good thing.”
Trump said his new plan would save taxpayers huge amounts of money. He claimed the plan could save “TRILLIONS OF DOLLARS.”
“Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before,” he posted ahead of the announcement.
The White House didn’t say how much money his order might save or which drugs will be affected.
Oz mentioned that he and other top health officials will meet with drug company leaders over the next 30 days to negotiate new prices based on what other countries pay.
The Health Department has the most authority to change drug prices for Medicare and Medicaid because it can set regulations. However, it still has limits. A new law passed in 2022 allows Medicare to negotiate prices for a few drugs starting in 2026. Before this, Medicare paid whatever prices drug companies set, and companies tried to block the law.
The price that people with private insurance pay for drugs is harder for the government to control.
The U.S. often spends much more on drugs compared to other wealthy countries, which has been a long-standing problem. Both political parties have criticized high drug prices, but a permanent solution has never passed in Congress.
Trump entered his first term accusing drug companies of “getting away with murder” and blaming countries with price controls for taking advantage of Americans.
On Sunday, Trump criticized the pharmaceutical industry again, saying that they often claim research and development costs are the reason for high prices, and these costs are unfairly passed onto Americans.
He pointed out the influence of drug companies’ lobbying and said that campaign donations “can do wonders, but not with me, and not with the Republican Party.”
“We are going to do the right thing,” he wrote.
