Former President Donald Trump signed a sweeping executive order on Sunday aimed at slashing the price of prescription drugs in the United States by aligning them with prices paid in other wealthy countries. The move revives a controversial “most favored nation” pricing model and significantly expands its scope beyond Medicare to include Medicaid and private insurers.
The executive order sets a 30-day timeline for the U.S. Trade Representative and the Department of Commerce to work with pharmaceutical companies and establish target prices for medications. If “significant progress” is not achieved within six months, the Department of Health and Human Services (HHS) will impose international price-matching through a formal rulemaking process, according to the White House.
A Renewed Push for Drug Price Reform
Trump’s new directive marks his most aggressive step yet in tackling soaring prescription drug costs—a central theme of his political messaging. It also revives and broadens a policy he attempted during his presidency in 2020, which was rescinded under the Biden administration before it took effect.
Unlike the earlier iteration, which was confined to certain Medicare Part B drugs, the new order seeks to apply price benchmarks across Medicare, Medicaid, and commercial markets. HHS Secretary Robert F. Kennedy Jr. has been tasked with setting these price targets by mid-June.
At a White House press conference, Trump touted the move as “historic,” claiming it would lead to price cuts of “59%, PLUS!” and possibly up to “90%” on some medications.
“American families are being gouged while other countries pay a fraction for the same drugs. That ends now,” Trump declared.
Why This Matters: U.S. Drug Prices Remain Among the Highest Globally
According to a 2024 report by the Department of Health and Human Services, U.S. drug prices are nearly three times higher than those in 33 peer countries. Approximately 67 million Americans rely on Medicare, making drug affordability a key issue for seniors and policymakers alike.
While the Biden administration made its own moves—negotiating prices on 10 popular drugs like Xarelto and Eliquis to take effect in 2026—Trump officials criticized the results as insufficient.
“Around 202%, that’s how much more we’re still paying than other countries,” a White House official noted, referring to price gaps that persist despite the Biden-backed Inflation Reduction Act. “We need bolder action.”
Key Elements of the Executive Order
- Timeline: Drug manufacturers must receive price target guidelines within 30 days.
- Enforcement Window: Companies have 6 months to show progress or face formal rulemaking to enforce lower prices.
- Scope: Applies to Medicare, Medicaid, and private/commercial health plans.
- Fallback: If targets are unmet, a “most favored nation” pricing model will be mandated, tying U.S. prices to those of countries with the lowest negotiated rates.
Criticism and Legal Uncertainty
The executive order immediately sparked backlash from Democratic lawmakers and healthcare economists who questioned both its practicality and legality.
Senator Ron Wyden (D-Oregon), ranking member of the Senate Finance Committee, called the order “all hat and no cattle.”
“Trump spent his entire first term blathering about Big Pharma, but in the end he always backed down,” Wyden said in a statement. “It’s the Democrats who gave Medicare the authority to negotiate and cap drug prices.”
Senator Bernie Sanders (I-Vermont), a long-time advocate for pharmaceutical reform, was blunt: “Trump knows his executive order will be thrown out by the courts.”
Sanders emphasized the need for legislation to make pricing reform durable, something Trump has yet to pursue.
The Industry’s Reaction and the “Rebate Puzzle”
Pharmaceutical experts voiced concerns that the executive order lacks crucial details about its real-world implementation, particularly regarding the complex rebate systems that influence what consumers and insurers actually pay.
Antonio Ciaccia, CEO of 46brooklyn, a drug pricing analysis group, noted that rebates and discounts negotiated between drugmakers and insurers help fund Medicaid programs and keep insurance premiums stable.
“If those disappear or are reduced due to the pricing overhaul, the funding gap could jeopardize public health programs,” Ciaccia warned. “The order says what it wants, but not how it plans to do it. And in drug pricing, the ‘how’ is everything.”
Ciaccia also suggested that drugmakers may find ways to manipulate the system, such as offering off-the-book rebates to foreign governments to maintain high U.S. prices.
How Does This Compare to Biden’s Approach?
The Trump order represents a stark departure from the Biden administration’s incremental approach. Under Biden’s Inflation Reduction Act, Medicare was authorized to negotiate prices on 10 drugs in 2023, expanding to 15 more in 2024. Price reductions from those negotiations are expected to take effect between 2026 and 2027.
The Trump team, however, argues those efforts fall short, citing continued disparities between U.S. and foreign prices even after negotiation.
What Happens Next?
Trump’s executive order sets in motion a timeline with two major milestones:
- By mid-June (30 days post-order), HHS and trade officials must present drugmakers with pricing targets.
- By mid-November (6 months post-order): If companies do not show adequate movement toward compliance, the government will implement “most favored nation” pricing rules.
Whether the policy survives legal challenges and industry opposition remains to be seen. Still, it positions drug pricing as a flashpoint issue ahead of the 2026 midterms and may influence broader healthcare reform debates.
Final Thoughts
Trump’s executive order reignites the debate over one of the most contentious topics in U.S. healthcare: why Americans pay more for medications than nearly any other developed nation. By proposing aggressive intervention through international price benchmarking, the former president is betting that a bold stance on Big Pharma can resonate with voters.
But critics warn that without congressional backing, enforcement clarity, and mechanisms to protect existing healthcare rebates, the order risks becoming yet another political talking point rather than a real solution.
