Trump Seeks to Align US Drug Costs With Cheapest Ones Abroad
2min read Trump has unveiled a plan to tackle the high cost of prescription drugs in the United States by signing an executive order that mandates U.S. drug prices match the lowest prices found globally.
Announced via a Truth Social post, Trump stated the order will be signed at 9 a.m. Monday in Washington, promising a dramatic reduction in healthcare costs for Americans. This bold initiative, dubbed a "most-favored nation" policy, aims to ensure that Americans pay no more for medications than the cheapest rates offered worldwide, potentially slashing U.S. drug prices by 30% to 80%.
A Game-Changing Proposal
Trump’s announcement targets a long-standing grievance: Americans pay the highest prices for prescription drugs in the world. In his social media post, he argued that this disparity has unfairly burdened U.S. consumers, calling them "the ‘suckers’ of America" who subsidize global pharmaceutical innovation "for no reason whatsoever."
He predicts that aligning U.S. prices with the lowest international benchmarks could not only lower costs domestically but also prompt a global "equalization" of drug prices, bringing "fairness to America" for the first time in years. However, specifics remain scarce—Trump did not clarify whether the policy would apply solely to government programs like Medicare and Medicaid, target specific drug categories, or extend to the broader market.
Market Jitters and Industry Pushback
The announcement triggered immediate turbulence in global markets. Asian pharmaceutical companies felt the heat in early Monday trading, with Japan’s Chugai Pharmaceutical Co. dropping as much as 7.2%—its steepest decline in a month—while Daiichi Sankyo Co. and Takeda Pharmaceutical Co. each fell around 5%. In South Korea, SK Biopharmaceuticals Co., Celltrion Inc., and Samsung Biologics Co. saw losses exceeding 3%. These declines signal investor concerns that lower U.S. prices could squeeze revenues for drugmakers, who rely heavily on the lucrative American market to fund research and development.
The pharmaceutical industry has long contended that high U.S. prices drive innovation, enabling the creation of life-saving therapies. Drugmakers warn that Trump’s plan could slash profits, potentially stifling the development of new treatments. While Trump acknowledged this argument in his post, he dismissed it as an excuse for perpetuating an unjust system, setting the stage for a fierce clash between consumer advocacy and industry interests.
A Rocky Road Ahead
This isn’t Trump’s first attempt to overhaul drug pricing. During his initial term, he proposed a Medicare pilot program to align prices with those in countries like France and Japan, where drugs cost significantly less. That plan, which targeted high-cost drugs with no generic competition, was struck down in federal court after pharmaceutical companies challenged its legality, citing inadequate rulemaking processes. The Biden administration opted not to appeal, instead enacting the Inflation Reduction Act in 2022, which allows Medicare to negotiate prices for select drugs—an approach Trump’s new proposal appears to build upon, though with a broader and more aggressive scope.
Legal hurdles loom large again. Experts question whether the executive order can withstand judicial scrutiny without Congressional backing, especially given the precedent of Trump’s earlier defeat. Politically, however, the move aligns with a key voter concern ahead of the 2024 election, as soaring drug costs remain a bipartisan issue. Trump’s promise of unprecedented savings could resonate widely, though its success hinges on navigating a gauntlet of lawsuits and legislative gridlock.
Global Implications and Open Questions
Beyond the U.S., the policy could ripple across international markets. Trump suggested that global drug prices might rise to offset losses in the American market, a notion echoed by billionaire hedge fund manager Bill Ackman. In March, Ackman proposed a similar idea on social media, arguing that barring drug companies from selling abroad for less than U.S. prices could force a worldwide price adjustment. Yet, enforcing such a policy across diverse healthcare systems poses significant challenges, and other nations may resist becoming the benchmark for U.S. costs.
For now, the executive order’s details remain murky. Will it target only government-funded programs, or reshape the entire U.S. drug market? Will it apply to all medications or just a subset? As stakeholders await clarity, Trump’s gambit marks a pivotal moment in the decades-long battle over drug affordability—one that could redefine healthcare economics both at home and abroad.
