President Donald Trump on Monday revived a controversial policy that goals to slash drug costs by tying the costs of some medicine within the U.S. to the significantly lower ones abroad.
Trump signed an executive order including several different actions to renew that effort, generally known as the “most favored nation” policy. He didn’t check with specific nations, but signaled that he would goal other developed countries because “there are some countries that need some additional help, and that is superb.”
“Principally, what we’re doing is equalizing,” Trump said during a press event on Monday. “We’re going to pay the bottom price there may be on the planet. We’ll get whoever is paying the bottom price, that is the worth that we will get.”
White House officials didn’t disclose which medications the order will apply to, but said it can impact the industrial market in addition to Medicare and Medicaid. They said Monday’s announcement might be broader than an analogous policy that Trump tried to push during his first term, which only applied to Medicare Part B drugs.
Officials added that the administration could have a selected give attention to drugs which have the “largest disparities and largest expenditures,” which could include popular weight reduction and diabetes treatments called GLP-1 drugs.
It’s unclear how effective the policy might be at lowering costs for patients. In a social media post on Monday, Trump claimed drug prices might be cut by “59%, PLUS!”
But Trump through the press event claimed drug prices may fall much more, between 59% and 80%, or “I suppose even 90%.”
Some Wall Street analysts and other experts also questioned whether the policy may be implemented.
In a note on Monday, JPMorgan analysts called the policy “difficult to practically implement” because it might likely require congressional approval and will run into legal hurdles.
It’s Trump’s latest effort to attempt to rein in U.S. prescription drug prices, that are two to 3 times higher on average than those in other developed nations – and as much as 10 times greater than in certain countries, in line with the Rand Corp., a public policy think tank.
In an announcement on Monday, the pharmaceutical industry’s biggest lobbying group, PhRMA, lauded Trump for taking aim at other nations “not paying their justifiable share.”Â
Still, PhRMA’s CEO Stephen Ubl said “importing foreign prices from socialist countries could be a foul deal for American patients and employees” because it might hurt the industry’s ability to bring them latest treatments. Some experts have said the order could face challenges from the pharmaceutical industry in court.
Despite the order, shares of U.S. drugmakers rose Monday. Merck‘s stock added greater than 4%, while Pfizer and Amgen climbed greater than 2%
AARP, which advocates for older Americans, thanked Trump for issuing the order in an announcement on Monday.
 “For too long, big drug firms have been ripping off America’s seniors—charging the very best prices on the planet for lifesaving prescriptions, padding their profits on the expense of American lives, and forcing older adults to skip medications they cannot afford,” AARP’s chief advocacy and engagement officer Nancy LeaMond said within the statement.
How Trump’s drug pricing order will work
President Donald Trump, joined by Health and Human Services Secretary Robert F. Kennedy Jr., speaks during a press conference within the Roosevelt Room of the White House on May 12, 2025, in Washington, DC.
Andrew Harnik | Getty Images
A part of the order takes aim at nations abroad, which have more power to barter down drug prices with pharmaceutical firms.
“Starting today, america will now not subsidize the health care of foreign countries, which is what we were doing,” Trump said, adding the U.S. “will now not tolerate profiteering and price gouging from Big Pharma.”
He added that “it was really the countries that forced Big Pharma to do things that, frankly, I’m unsure they really felt comfortable doing.”
The order directs the Office of the U.S. Trade Representative and the Department of Commerce to crack down on “unreasonable and discriminatory policies” in foreign countries that “suppress” drug prices abroad, the officials said.
“We’re going to be working to ensure that that countries aren’t being unfair of their negotiations with pharmaceutical firms, right?” one official said. Drugmakers are “consistently complaining” about being put “in an untenable situation when in these negotiations” because those firms typically need to broker drug discounts with entire countries, the official added.
Unlike the U.S., several foreign countries offer universal health coverage where the federal government is the only payer, giving it significant leverage to barter or set drug prices.
White House officials said they expect drugmakers to supply discounts across the board to “reciprocate” the actions the Trump administration is taking to handle prices abroad.
Trump’s order also directs the secretary of the Department of Health and Human Services to ascertain a pathway for U.S. patients to purchase their drugs directly from manufacturers at most favored nation prices, bypassing middlemen.
“We will cut out the middlemen and facilitate the direct sale of medication at essentially the most favorite nation price, on to the American citizen,” Trump said.
Inside 30 days, the secretary will even need to set clear targets for price reductions across all markets within the U.S., in line with the officials. That may open up a round of negotiations between HHS and the pharmaceutical industry, officials said, not providing exact details on the character of those talks.
If “adequate progress” shouldn’t be made toward those price targets, HHS Secretary Robert F. Kennedy Jr. will impose essentially the most favored nation pricing on drugs through rulemaking.
The order also directs the Food and Drug Administration to contemplate expanding imports from other developed nations beyond Canada. Trump signed a separate executive order in April directing the FDA to enhance the method by which states can apply to import lower-cost drugs from Canada, amongst other actions intended to lower drug prices.
Monday’s order also directs the Department of Justice and Federal Trade Commission to aggressively implement “anti-competitive actions” that keep prices high within the U.S.
The Department of Commerce will even consider export restrictions that “fuel and enable that low pricing abroad.”Â
The results on patients, firms
Drugmakers have argued that essentially the most favored nation policy would hurt their profits and ultimately, their ability to research and develop latest medicines.
White House officials contended that pharmaceutical firms will proceed to generate profits after the worth cuts in the event that they realize that the U.S. “alone shouldn’t be going to pay for innovation” and in the event that they increase prices abroad to get additional revenue there.
Drugmakers “should pursue deals where they get financially rewarded commensurate the worth that they’re providing to other nations, health systems,” one official said.
“Other countries should pay research and development, too. It’s for his or her profit,” Trump added on Monday.
The industry also lobbied against similar Trump plans during his first term. He tried to push the policy through in the ultimate months of that term, but a federal judge halted the trouble following a lawsuit from the pharmaceutical industry. The Biden administration then rescinded that policy.
White House officials initially pressed congressional Republicans to incorporate a most favored nation provision in the key reconciliation bill they plan to pass in the approaching months, however the policy would have specifically targeted Medicaid drug costs, Politico reported earlier this month. Several GOP members opposed that measure.
The industry’s largest trade group, PhRMA, estimated that Trump’s Medicaid proposal could cost drugmakers as much as $1 trillion over a decade.Â
Some health policy experts have said a most favored nation drug policy will not be effective at lowering medication costs.
For instance, USC experts said the policy “cannot undo the essential economics of the worldwide drug marketplace,” where 70% of pharmaceutical profits worldwide come from the U.S.
“Facing a selection between deep cuts of their U.S. pricing or the lack of weakly profitable overseas markets, we will expect many firms to drag out from overseas markets at their earliest opportunity,” experts said in a report in April.Â
That may leave Americans paying the identical amount for medications, drugmakers with lower profits and future generations of patients with less innovation, they said.
“In sum, everyone loses,” the experts said.
Even when the drug industry pushes back on Trump’s executive order in court, his administration still has one other tool to push down drug prices: Medicare drug price negotiations.
It is a key provision of the Inflation Reduction Act that provides Medicare the ability to barter certain prescription drug prices with manufacturers for the primary time in history.
Trump last month proposed a change to that policy that drugmakers have long sought. Lawmakers on each side of the aisle may very well be receptive to the thought, which proposes changing rules that differentiate between small-molecule drugs and biologic medicines.
Trump last week said he plans to announce tariffs on medicines imported into the U.S. inside the following two weeks. Those planned levies aim to spice up domestic drug manufacturing.Â
Drugmakers, including Eli Lilly and Pfizer, are pushing back on those potential duties. Some firms have questioned whether the tariffs are crucial, on condition that several of them have already announced latest U.S. manufacturing and research and development investments since Trump took office.Â
Still, Trump last week doubled down on efforts to reshore drug manufacturing. He signed an executive order that streamlines the trail for drugmakers to construct latest production sites.
