In a significant move to tackle the high cost of prescription drugs in the United States, former President Donald Trump signed an executive order aiming to align U.S. drug prices with those found in other developed nations. The order, originally issued during his presidency, set out to deliver immediate and sweeping changes to the pharmaceutical pricing model, giving drug manufacturers a 30-day deadline to voluntarily lower prices or risk federal intervention.
This aggressive step marked one of the most direct confrontations between the U.S. government and the pharmaceutical industry in recent history, with implications that continue to influence debates around drug pricing policy in the country.
A Bold Step to Tackle Soaring Drug Costs
Prescription drug prices in the United States have long been among the highest in the world. According to data from the Organisation for Economic Co-operation and Development (OECD), Americans pay on average two to three times more for medications than patients in other developed countries like Canada, Germany, or the United Kingdom. This disparity has placed an enormous burden on both consumers and public healthcare programs such as Medicare and Medicaid.
Trump’s executive order attempted to reverse this trend by implementing a “most favored nation” pricing model. This approach would tie the prices paid by Medicare for certain drugs to the lowest price paid by other advanced economies. The goal was to force pharmaceutical companies to bring down U.S. prices or risk losing access to a substantial portion of the American market—particularly Medicare, which covers over 60 million people.
A 30-Day Ultimatum to Big Pharma
The order provided a 30-day window for pharmaceutical companies to propose alternative measures to reduce prices voluntarily. If they failed to act, the administration pledged to move forward with mandatory pricing reforms.
This ultimatum drew mixed reactions. Some health policy experts praised the move as a bold attempt to address systemic issues in drug pricing. Others, including industry stakeholders, raised concerns about the unintended consequences of the policy, including potential disruptions to drug availability and reduced incentives for pharmaceutical innovation.
The Pharmaceutical Research and Manufacturers of America (PhRMA), an industry trade group, warned that pegging prices to other countries could stifle innovation and limit access to new therapies. Nevertheless, consumer advocacy groups welcomed the push, viewing it as a necessary step toward making medications more affordable.
Addressing the Role of Middlemen
In addition to targeting manufacturers, the executive order aimed to disrupt the network of intermediaries involved in the pharmaceutical supply chain—particularly pharmacy benefit managers (PBMs). These entities negotiate discounts and rebates between drug manufacturers and insurers but have faced criticism for a lack of transparency and for not always passing savings on to consumers.
The order sought to redirect these rebates directly to patients at the point of sale, effectively cutting out the middlemen. The administration argued that this would result in immediate savings for consumers, especially for those with high out-of-pocket costs.
However, analysts cautioned that such a change could lead to higher premiums for some consumers, as insurers would no longer receive the same level of rebates to offset costs. The trade-off between lower drug prices and potential increases in insurance premiums was a key concern highlighted by healthcare economists.
Drug Importation from Canada and Beyond
Another key component of the executive order was the promotion of drug importation from countries like Canada, where prices are significantly lower. The U.S. Department of Health and Human Services (HHS) was instructed to facilitate pilot programs that would allow states, pharmacies, and wholesalers to import certain drugs safely and legally.
Florida, under Governor Ron DeSantis, was one of the first states to seek approval for such a program. The state claimed it could save hundreds of millions of dollars annually through drug importation. However, the proposal faced resistance from both Canadian officials and domestic pharmaceutical interests. Canada expressed concern that large-scale U.S. importation could deplete its own drug supply, while pharmaceutical companies argued that it would compromise safety and regulatory oversight.
Despite these challenges, the push for importation underscored the growing frustration among Americans over unaffordable drug prices and the perceived lack of competition in the U.S. market.
Historical Context: A Longstanding Issue
The high cost of prescription drugs in the U.S. has been a persistent issue for decades. Efforts to reform pricing mechanisms date back to at least the 1990s, when lawmakers began debating whether Medicare should be allowed to negotiate directly with drug manufacturers. Currently, Medicare is largely prohibited from negotiating prices for most prescription drugs, a policy that has been the subject of ongoing political contention.
The Affordable Care Act (ACA) under President Barack Obama introduced measures to close the so-called “donut hole” in Medicare drug coverage, providing some relief to seniors. However, it did not directly tackle the underlying pricing model used by pharmaceutical companies.
Trump’s executive order, while controversial, was one of the most direct federal attempts to control prices. It followed earlier initiatives by his administration, including the creation of a drug pricing transparency rule and a failed attempt to require drug companies to disclose list prices in television advertisements.
The Legacy and Future of Drug Pricing Reform
Although the executive order set an ambitious framework, its implementation faced significant legal and logistical hurdles. Pharmaceutical companies mounted legal challenges, and parts of the policy were delayed or blocked by courts.
Nonetheless, the ideas behind the order have continued to influence policy discussions under subsequent administrations. President Joe Biden, for example, has supported measures to allow Medicare to negotiate prices for certain drugs, a provision included in the 2022 Inflation Reduction Act. This law represents a significant shift in federal drug pricing policy, incorporating some principles championed by the Trump-era executive order.
Experts suggest that bipartisan concern over rising healthcare costs may continue to drive efforts to reform drug pricing in the years ahead. While approaches differ, there is growing consensus that the status quo is unsustainable for both the government and individual consumers.
Conclusion: A Tipping Point for U.S. Drug Pricing?
Trump’s executive order to reduce prescription drug prices marked a defining moment in the broader conversation about healthcare affordability in America. By directly confronting pharmaceutical companies, intermediaries, and regulatory barriers, the order attempted to realign drug pricing with international standards and deliver immediate relief to consumers.
Although the long-term impact of the order remains mixed, it set the stage for further reforms and elevated drug pricing to a national priority. With public pressure mounting and bipartisan interest in reform continuing to grow, the coming years may see additional measures aimed at ensuring that life-saving medications are both accessible and affordable for all Americans.