President Donald Trump signed an executive order on Monday aimed at lowering prescription drug prices, instituting a “most favored nation’s policy” that would require drug companies to charge Americans the same price other nations pay.
Trump signed a similar measure during his first term to institute price controls for fifty drugs paid for with Medicare Part B, but a court blocked its implementation, ruling that the administration had skipped key administrative steps in trying to institute the proposal.
Monday’s executive order is broader in scope, focusing on all prescriptions drugs where the price disparities between the U.S. and foreign nations are the widest. But according to the White House, this executive order is not focused on particular class of pharmaceutical drugs.
The order — which is likely to run into legal challenges as well — is in keeping with the administration’s broader trade war strategy, which relies on a suite of policy tools to address what officials say is an uneven global economic playing field.
“What’s been happening is we’ve been subsidizing other countries throughout the world,” Trump said on Monday morning before signing the executive action. “Our country is the highest drug prices anywhere in the world, by sometimes a factor of five, six, seven, eight times.”
“It’s a redistribution where it could be the same top line, but it’s going to be distributed differently, and Europe is going to have to pay a little bit more, the rest of the world is going to have to pay a little bit more, and America is going to pay a lot less,” Trump added. “So basically, what we’re doing is equalizing.”
During a call with reporters on Monday morning, a White House official said the executive order will direct the U.S. Trade Representative and Commerce Department to “take all appropriate action against unreasonable and discriminatory policies in foreign countries that suppress drug prices abroad,” to help pharmaceutical companies combat what the administration characterized as “unfair” negotiations overseas.
“We are taking aggressive action on those fronts right to make sure that foreign countries are treating them fairly, and therefore we expect the drug companies to reciprocate for those actions and be providing larger discounts across the board,” a White House official said.
The order also directs Secretary of Health and Human Services Robert F. Kennedy Jr. – a longtime critic of the pharmaceutical industry – to set targets for price reductions across all markets within 30 days, and directs the Food and Drug Administration to consider prescription drug imports from developed nations beyond Canada.
Democrats have long campaigned against high prescription drug price costs, and campaigned on a provision in the 2022 Inflation Reduction Act that capped insulin prices to $35 per month for seniors paying with Medicare Part D. The price of insulin is astronomically higher in the U.S. compared with other developed nations.
“A common asthma drug, costs almost $500 here in America, but costs less than $40 in the United Kingdom,” Trump said as an example. “And the weight loss drug Ozempic costs ten times more in the United States than in the rest of the developed world.”
Oftentimes, pharmaceutical drug prices are much lower overseas because single-payer health-care programs negotiate prices with pharmaceutical companies.
On the 2024 campaign trail, Republicans criticized then-Vice President Kamala Harris for pledging to ban so-called “price gouging” in grocery stores if elected president, a move that the GOP slammed as akin to socialist price controls. “After causing catastrophic inflation, Comrade Kamala announced that she wants to institute socialist price controls,” Trump said on the campaign trail in August in reaction to her proposal. “Her plan is very dangerous because it may sound good politically,” he said at the summer rally in Pennsylvania, adding: “This is Communist; this is Marxist; this is fascist.”
Pressed Monday morning by National Review about how Trump’s prescription-drug executive order differs from Harris’s anti-price gouging proposal, White House officials said that Americans shouldn’t be paying several times the price other nations pay for the same exact drugs, and that this order will offer price relief for Americans by causing other countries to pay more for prescription drugs and contribute to pharmaceutical research and development.
“So, this isn’t price fixing, per se,” a White House official said. “What we’re doing here is kind of fixing the market and just allowing market forces to operate in a way they’re supposed to to deliver price relief for the American people.”
This executive action comes the same week that the House Energy and Commerce Committee is expected to hold a hearing on this year’s “big, beautiful” bill, which is likely to enact work requirements and other cost-saving changes to Medicaid to pay for the president’s border security, defense, energy, and tax-cut legislative priorities. Republicans believe that providing prescription-drug price relief to Americans through pharmaceutical price control measures will neutralize some of the pushback the GOP will get for making even minor changes to entitlement programs in this year’s tax-and-spend bill.