President Donald Trump signed a sweeping executive order lowering prescription drug prices through a “Most Favored Nation” policy in a move that is legally dubious and is sure to face fierce opposition from pharmaceutical companies.
The order continues the “Most Favored Nation” approach to prescription drug pricing under Medicare Part B from Trump’s first administration, which sets drug prices based on their prices in foreign nations. A federal judge blocked its implementation in 2020 before the Biden administration abandoned the program.
“Starting today, the United States will no longer subsidize the healthcare of foreign countries,” Trump said Monday morning during a press conference in the Roosevelt Room. “And we’ll no longer tolerate profiteering and price gouging from big pharma.”
Trump has long denounced the U.S.’s “subsidizing” of foreign nations, including the European Union. Trump is seeking to end what he calls the EU taking advantage of the U.S. with the executive action this week.
“So for the first time in many years, we’ll slash the cost of prescription, we will bring fairness to America,” he continued.
The president claimed that prices could drop between 59% and 90% of current costs and threatened retaliation against companies that don’t abide by the order.
“Big Pharma will either abide by this principle voluntarily, or we’ll use the power of the federal government to ensure that we are paying the same price as other countries,” Trump warned.
The executive order, broader than the 2020 action, directs the U.S. Trade Representative and the Department of Commerce to take all appropriate action against unreasonable and discriminatory policies in foreign countries that suppress drug prices abroad.
TRUMP SIGNS EXECUTIVE ORDER TO LOWER DRUG PRICES
Health and Human Services Secretary Robert F. Kennedy Jr. will be tasked with facilitating direct consumer sales at “Most Favored Nation” prices and, within 30 days, set clear targets for price reductions across all markets in the U.S.
“If adequate progress is not made towards these price reduction targets, the Secretary of Health and Human Services will impose most favored nation pricing via rulemaking,” said a White House official. “The Food and Drug Administration will consider expanding importation from other developed nations beyond just Canada. And the Department of Justice and Federal Trade Commission will aggressively enforce against anti-competitive actions that keep prices high in the United States.”
Kennedy, who joined Trump in the Roosevelt Room, touted the potential revenue from increased drug costs from Europe.
“If the Europeans raised … the price of their drugs by just 20%, that is 10 trillion [dollars]. That can be spent on innovation and the health of all people all across the globe,” he boasted.
The Trump administration said it would focus on drug prices with the largest disparities and expenditures between the U.S. and foreign nations, specifically pointing to weight-loss drugs.
“I would say it would be fair to expect that [good laboratory practice] ones, given that they hit both of those categories, will be a focus in there,” said the White House official. “There will be an expectation that those prices should come down, and then if they don’t, that we will be looking at our various policy levers that can be used to force those prices down.”
It is unclear whether the Trump administration has the legal authority to enforce the executive order lowering drug prices without the approval of Congress.
To make the “Most Favored Nation” legally safe, it would require Congress to pass a new law giving Kennedy the authority to regulate drug prices.
Pharmaceutical companies are certain to challenge the order in court. “Government price setting in any form is bad for American patients. Policymakers should focus on fixing the flaws in the U.S. system, not importing failed policies from abroad,” said Alex Schriver, a spokesman for the lobbying group PhRMA, in a statement.
TRUMP SAYS HE’LL ANNOUNCE PHARMACEUTICAL TARIFFS ‘OVER THE NEXT TWO WEEKS’
However, the White House official claimed that “there is authority.”
“For instance, there’s authority … for USTR and Commerce to be able to take action against unfair and discriminatory practices by foreign countries against U.S. companies,” the official said, “as well as there is action on the lines of anything that may impair United States national security.”
