Donald Trump signs EO to drug pricing
President Donald Trump has signed an executive order on drug pricing to match prices in other countries.
President Donald Trump signed an executive order on May 12th instructing drugmakers to lower the prices of drugs alongside what other countries pay.
Trump’s order brings US trade representatives and the Commerce Department to a 30-day deadline, providing drugmakers with price targets and the government is taking further steps to lower prices if it doesn’t make “great progress” towards those targets within six months of being signed.
During his first term in 2020, Trump was promoting similar “most preferred nation” rules for drug prices that were applied to Medicare payments but were later withdrawn by the Biden administration. White House spokesman Kush Desai said the new executive order is built on that policy by not only restricting certain drugs under Medicare, but also by including Medicaid and private sector insurance available on commercial markers.
The amount of drug prices changes since Trump’s executive order remains unknown, but the president said in a social media post on May 12 that it would be cut by “in addition to 59%!” Later at the White House, Trump placed the numbers between 59% and 80% before adding that he “estimates 90%.”
Critics of the concept of “most preferred countries” have argued that pharmaceutical companies can play games on the system by securing transactions with foreign governments to maintain current US drug pricing. Others say that if the pharmaceutical industry loses profits, it could curb medical innovation.
What do you say about Trump’s drug price executive order?
Health and Human Services Secretary Robert F. Kennedy Jr. will set price reduction targets in all U.S. markets within 30 days, White House officials said on May 12.
Officials say that if appropriate progress is not made towards price reduction targets, HHS secretaries will impose pricing in the most favorable countries through rulemaking.
How do US drug prices compare to other countries?
According to a 2024 report from the Department of Health and Human Services, drug prices in the United States are almost triple in 33 comparative countries. Approximately 67 million Americans are enrolled in Medicare.
Connecting Medicare drug prices to international prices is a completely different approach to the way the Biden administration tried to lower Medicare drug prices.
Under Biden’s 2022 Climate and Health Act, Medicare, the inflation reduction act, was empowered to negotiate prices with pharmaceutical companies on a limited number of drugs.
He summoned the process that had established “equalization” and said other countries had to pay for research and development.
“From today, the US will no longer subsidize foreign healthcare.
The Biden administration has already negotiated low prices for 10 widely defined drugs, including Xarelto and Eliquis, which will come into effect in 2026. In January, Medicare designated an additional batch of 15 drugs to be negotiated this year. These include the blockbuster diabetes and weight loss pills Ozempic and Wegovy.
Asked how Trump’s plans will affect Biden’s inflation reduction law and drug price negotiations, White House officials said after the first round of drug price negotiations the prices are “often more than 200% higher than what many foreigners get.”
Officials viewed the numbers as inadequate and added that the Trump administration is taking action beyond what has been achieved under the Inflation Reduction Act.
Democrats respond to Trump’s order
Ron Wyden of D-oregon, a ranking member of the Senate Finance Committee, called Trump’s order “no hats and cows.”
“Trump spent his entire first term blowing away about Big Pharma, but in the end he always retreated instead of fighting for his seniors and family in America,” Wyden said in a statement.
Wyden said it was Democrats who took on the big drug company by negotiating lower drug prices on behalf of older people and empowering Medicare to lower out-of-pocket costs for expensive prescriptions.
“If Trump is serious about lowering drug prices, he will work with Congress to not only sign the paper, but also strengthen Medicare drug price negotiations,” he said.
Trump knows “his executive order will be dumped by the court,” adds Sen. Bernie Sanders, a former two-time Democratic presidential candidate for the Vermont Independent, has long sought prescription drug prices.
Kennedy mentioned Sanders’ position at a May 12 press conference at the White House, telling the senators that the best way to turn ideas into practice is for Trump to support legislation on the issue.
The impact on drug rebates and insurance discounts are unknown
Drug pricing experts said Trump’s order limits the amount consumers pay from their pockets, and rarely explains how it affects the complex web of drug rebates and insurance discounts in the country. These rebates and discounts will be used to fund certain Medicaid programs and lower health insurance premiums, said Antonio Chiasia, CEO of 46 Blue Clin and drug pricing expert.
If these drug discounts and rebates disappear, Ciaccia said it could put funds for other health priorities at risk. He added that Trump’s executive order does not explain how it will address the funding gap.
“I haven’t seen many ways,” Ciaccia said. “And what about friction always when it comes to fixing US drug pricing issues?”
Contribution: Joey Garrison, USA TODAY; Reuters
