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New Executive Order Demands Drug Price Cuts

Jason Phillippe by Jason Phillippe
May 13, 2025
in Health
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New Executive Order Demands Drug Price Cuts

Photo by Árpád Czapp on Unsplash

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The clock is ticking.

Former President Donald Trump issued a significant executive order requiring pharmaceutical companies to lower prescription drug prices in the U.S. within 30 days or face new regulatory limits. The directive tasked Health Secretary Robert F. Kennedy Jr. with negotiating lower costs with drugmakers. If negotiations fail, Kennedy must propose a rule tying U.S. drug prices to those in other countries. Trump emphasized that Americans should not pay more than Europeans for the same medications, stating the goal is to “equalize” prices globally.

The order’s direct impact on Americans with private health insurance remains uncertain, as the federal government’s greatest authority lies in regulating costs for Medicare and Medicaid. These programs spend hundreds of billions annually on prescriptions for nearly 150 million people combined. However, the pharmaceutical industry quickly pushed back, with PhRMA, the major lobbying group, warning that the move could hurt research and development, labeling the plan a “bad deal” for patients.

Trump’s pricing strategy is a revived version of his earlier “most favored nation” model, which was blocked by the courts during his first term. That policy aimed to cap what the U.S. pays for certain medications at the lowest price paid internationally. Though many Republicans and drug companies opposed the idea, Trump argued that foreign countries benefit unfairly from lower drug costs at Americans’ expense. During the announcement, he criticized pharmaceutical companies’ profit margins and warned of potential federal investigations into their practices.

Despite Trump’s bold promises, experts suggest Americans shouldn’t expect immediate savings. Health law scholars note that the executive order largely relies on voluntary compliance from drugmakers, and any binding regulations would take years to implement. While the 2022 Inflation Reduction Act gave Medicare new powers to negotiate drug prices starting in 2026, the broader market—especially for those with private insurance—remains difficult to regulate.

Trump concluded by reiterating his intent to “do the right thing” for American consumers, asserting that drug companies have long taken advantage of the U.S. market. Though some pharmaceutical stocks rose following the announcement, the administration offered no concrete estimates on expected savings. The long-standing issue of high drug prices in the U.S. remains unresolved, with bipartisan support for reform but no permanent legislative solution in sight.

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