President Donald Trump has issued a new executive order giving pharmaceutical companies a 30-day window to voluntarily lower prescription drug prices—or face federal intervention that could tie U.S. prices to those in other nations.
Signed Monday, the directive charges Health Secretary Robert F. Kennedy Jr. with negotiating reduced rates within the month. If talks stall, Kennedy must craft a new rule that would peg U.S. drug payments to prices in countries where medications cost less.
“We’re going to equalize,” Trump declared during a press conference that morning. “We’re all going to pay the same. We’re going to pay what Europe pays.”
It remains unclear how much the order could change drug prices for Americans with private health insurance. The federal government’s pricing power is largely limited to Medicare and Medicaid.
Just hours earlier, House Republicans had unveiled a separate proposal to slash $880 billion from Medicaid, intensifying debate over public healthcare spending.
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Through Medicare alone, which covers nearly 70 million older Americans, taxpayers reportedly spend hundreds of billions of dollars annually on everything from pills to infusions. Medicaid, which supports nearly 80 million low-income and disabled Americans, also shoulders a hefty drug bill.
The pharmaceutical industry quickly fired back. The lobbying group PhRMA dismissed the plan as reckless and warned of harmful consequences.
“Importing foreign prices from socialist countries would be a bad deal for American patients and workers,” said Stephen J. Ubl, PhRMA’s president and CEO. “It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America.”
Trump’s “most favored nation” model, a concept that would cap what the U.S. pays for certain drugs at the lowest price paid by other developed countries—has long been a lightning rod. He tried a similar executive order in the final stretch of his presidency, targeting injectable and infusion drugs administered in clinics.
That effort stalled after a court blocked implementation during President Biden’s tenure. Critics, including the pharmaceutical lobby, argued it would let foreign governments dictate U.S. drug values.
The latest iteration still faces skepticism among Republicans. Senate Majority Leader John Thune said the policy would be “fairly controversial” if it had to pass through Congress.
Trump, flanked at the White House by Kennedy, CMS head Dr. Mehmet Oz, FDA Commissioner Dr. Marty Makary, and NIH Director Jay Bhattacharya, deflected blame from drugmakers themselves, pointing instead to what he sees as international price manipulation.
“The pharmaceutical companies make most of their profits from America,” Trump said. “That’s not a good thing.”
He also warned of federal investigations into pricing practices and floated the idea of importing cheaper foreign drugs to pressure U.S. companies.
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On social media over the weekend, Trump hyped the plan as a potential way to save “TRILLIONS OF DOLLARS.” But the White House offered no estimates Monday on how much might actually be saved.
According to Oz, top health officials will meet with pharmaceutical executives in the coming month to pitch new price points based on what peer countries pay.
Still, policy experts caution against high expectations. Rachel Sachs, a health law expert at Washington University, suggested the executive order is more bark than bite, at least for now.
“It really does seem the plan is to ask manufacturers to voluntarily lower their prices to some point, which is not known,” Sachs said. “If they do not lower their prices to the desired point, HHS shall take other actions with a very long timeline, some of which could potentially, years in the future, lower drug prices.”
While HHS can impose pricing rules for Medicare and Medicaid, its authority is limited without congressional backing. In 2022, Congress passed a law granting Medicare the power to negotiate prices for a small number of high-cost drugs starting in 2026—over drugmakers’ fierce objections and legal challenges.
Controlling what private insurance plans pay remains far more difficult.
Compared to other wealthy nations, the U.S. consistently pays more for medications, an issue both Democrats and Republicans have long acknowledged, but failed to resolve through legislation.
During his first term, Trump accused the pharmaceutical industry of “getting away with murder” and claimed foreign countries were exploiting American consumers.
Ahead of the latest announcement, Trump again escalated his rhetoric, posting online that the “Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the ‘suckers’ of America, ALONE.”
He added that no amount of campaign donations would sway him, writing, “Campaign contributions can do wonders, but not with me, and not with the Republican Party.”
“We are going to do the right thing,” he promised.
Meanwhile, investors seemed unfazed. Several major drug companies saw their stocks rise Monday morning. Merck, buoyed by the cancer drug Keytruda, rose 3.9%. Pfizer gained 2.5%, and Gilead Sciences saw a 5.8% jump.
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