Equalizing America’s Drug Costs: Can Trump’s Executive Order Deliver Relief?

By IndraStra Business News Desk

Cover Image Attribute: Image by Jan from Pixabay

President Donald J. Trump’s recent executive order, signed on Monday, marks a bold attempt to address a longstanding grievance in American healthcare: the exorbitant cost of prescription drugs. The order, which sets a 30-day deadline for pharmaceutical companies to align U.S. drug prices with those paid by other wealthy nations, signals a renewed push to deliver on Trump’s campaign promise to put American patients first. By invoking a “most-favored-nation” pricing model, the administration aims to end what it describes as foreign free-riding on American innovation, where the U.S. subsidizes global pharmaceutical profits through higher prices. Yet, as the plan unfolds, it raises complex questions about feasibility, economic impact, and the delicate balance between affordability and the incentives that drive medical innovation. Drawing solely on the details provided in recent news reports, this article examines the potential benefits and pitfalls of Trump’s initiative, striving for a measured perspective that neither inflates its promise nor dismisses its intent.
The core of Trump’s executive order is a directive to ensure that Americans pay drug prices comparable to those in other developed nations, particularly within the Organization for Economic Cooperation and Development (OECD). According to data cited by the administration, Americans pay more than three times what other OECD nations pay for brand-name drugs, even after accounting for U.S. discounts. This disparity stems from a system where the U.S., despite having less than five percent of the world’s population, funds roughly 75 percent of global pharmaceutical profits. Trump articulated the issue vividly: “In case after case, our citizens pay massively higher prices than other nations pay for the same exact pill, from the same factory, effectively subsidizing socialism aboard [abroad] with skyrocketing prices at home.” His anecdote about a friend paying $88 for a weight loss injection in London, compared to $1,300 for the same injection in the U.S., reflects the visceral frustration many Americans feel.
The executive order outlines several mechanisms to achieve price parity. It instructs the Secretary of Health and Human Services, now led by Robert F. Kennedy Jr., to negotiate directly with manufacturers to establish prices based on what other countries pay. If companies fail to comply within 30 days, the administration will propose rules to enforce most-favored-nation pricing and explore aggressive measures, such as imposing tariffs, facilitating drug importation, or restricting exports. The order also directs the U.S. Trade Representative and Secretary of Commerce to address foreign practices that undercut U.S. market prices, signaling a broader trade strategy. Additionally, the Federal Trade Commission is tasked with scrutinizing anti-competitive practices, such as patent protections or deals that delay generic drug releases. A White House official noted, “We’re all familiar with some of the places where pharmaceutical companies push the limits to prevent competition that would lower their prices.”
This is not Trump’s first attempt to tackle drug pricing. During his first term, he signed an executive order to align Medicare drug prices with those of comparable countries, a policy rescinded by the Biden administration before implementation. The Biden administration’s alternative—negotiating prices that averaged 78 percent higher than in 11 comparable countries—was criticized by Trump as a failure to “beat Medicare.” The current order expands on past efforts by including Medicaid alongside Medicare and introducing direct-to-consumer purchasing programs at international prices. Trump’s recent actions, including orders to enhance price transparency and provide discounts for low-income patients, reflect a multi-pronged approach to reform. He has promised significant savings, claiming in a social media post that his plan could save “TRILLIONS OF DOLLARS” and reduce healthcare costs “by numbers never even thought of before.”
The pharmaceutical industry, however, has pushed back forcefully. The Pharmaceutical Research and Manufacturers of America (PhRMA), led by CEO Stephen J. Ubl, called the plan a “bad deal” for American patients, arguing that importing foreign prices would cut billions from Medicare without guaranteeing improved access to medicines. Ubl warned that such policies “jeopardizes the hundreds of billions our member companies are planning to invest in America, making us more reliant on China for innovative medicines.” This concern echoes the industry’s longstanding argument that high U.S. prices fund research and development (R&D), which drives new treatments. The pharmaceutical sector is undeniably lucrative—global market estimates reached €1.3 trillion in 2023, with companies like Johnson & Johnson posting $14 billion in net profit in 2024 and Sanofi reporting a 27.6 percent operating margin in France. Yet, the industry contends that price cuts could stifle innovation, a claim that resonates in a nation reliant on new drugs to address evolving health challenges.
Skepticism about the order’s feasibility is not limited to industry critics. Legal experts, such as health policy lawyer Paul Kim, argue that the plan stretches beyond current statutory limits, particularly regarding direct-to-consumer importation. Trump’s earlier attempt at most-favored-nation pricing for Medicare drugs was blocked by courts, and the current order’s broader scope—encompassing Medicaid and potential tariffs—may face similar challenges. Analyst Evan Seigerman of BMO Capital Markets noted, “Implementing something like this is pretty challenging. He tried to do this before and it was stopped by the courts.” The absence of a White House analysis detailing savings or affected drugs further fuels uncertainty. Investors, initially rattled by the order, appeared to shrug off its immediate impact, as shares of major drugmakers like Merck, Pfizer, and Gilead Sciences rallied on Monday, with Merck rising 4.3 percent and Pfizer gaining 2.7 percent.
Internationally, the order has ripple effects. In Europe, pharmaceutical companies are leveraging Trump’s threats to advocate for higher drug prices, arguing that European governments undervalue treatments. The European Federation of Pharmaceutical Industries and Associations (EFPIA) warned that without “rapid, radical policy change,” Europe risks losing pharmaceutical research and manufacturing to the U.S. This dynamic highlights a tension: while Trump aims to lower U.S. prices, his policies may inadvertently pressure other nations to raise theirs, potentially reshaping global drug markets. Meanwhile, in India, a key supplier of low-cost generics to the U.S., pharmaceutical stocks fell 1.6 percent, with companies like Sun Pharma dropping 4.6 percent. Analyst Shrikant Akolkar of Nuvama Institutional Equities cautioned that a 50 percent or greater price cut would harm both branded and generic markets, given that the U.S. accounts for nearly a third of India’s $9 billion in pharma exports.
The order’s focus on Medicare and Medicaid, which cover nearly 150 million Americans and account for hundreds of billions in annual drug spending, gives the administration significant leverage. However, its impact on the privately insured—millions of Americans whose drug prices are harder for the government to influence—remains unclear. Congress’s 2022 law allowing Medicare to negotiate prices for select drugs starting in 2026 was a step toward reform, but it faced industry lawsuits and did not address private insurance. Trump’s order, while ambitious, operates within these constraints, and its success hinges on navigating legal, economic, and political hurdles.
On one hand, the initiative taps into bipartisan frustration with drug prices. Both parties have long decried the U.S.’s outsized spending compared to other wealthy nations, where governments often set prices. Trump’s rhetoric—accusing pharmaceutical companies of treating Americans as “suckers” and blaming foreign countries for exploiting U.S. innovation—resonates with voters weary of high costs. His promise to “equalize” prices, as stated in his press conference, “We’re all going to pay the same. We’re going to pay what Europe pays,” offers a straightforward vision of fairness. Measures like increasing generic drug availability and cracking down on anti-competitive practices could yield tangible benefits, fostering competition and lowering costs over time.
On the other hand, the order’s aggressive timeline and sweeping scope invite skepticism. The 30-day deadline for price reductions is ambitious, given the complexity of negotiating with global corporations. The threat of tariffs, import programs, or export restrictions may pressure companies, but risks trade disputes or supply chain disruptions. The industry’s warning about reduced R&D investment carries weight, as new drugs often take years and billions to develop. Moreover, the order’s reliance on rulemaking and enforcement mechanisms, such as FTC investigations, may be slowed by legal challenges or bureaucratic delays. Trump’s claim of saving “trillions” lacks substantiation, and without clear metrics, public expectations may outstrip reality.
The executive order also reflects a broader philosophical debate about the role of markets versus government intervention. Trump’s approach blends free-market rhetoric—criticizing foreign “socialism”—with heavy-handed state action, such as tariffs and price controls. This tension underscores the challenge of reforming a system where drug prices are shaped by global economics, domestic policy, and corporate strategy. While Trump’s supporters may cheer his defiance of pharmaceutical lobbying, which he dismissed by saying campaign contributions “can do wonders, but not with me, and not with the Republican Party,” critics argue that his plan risks overpromising and underdelivering.
Ultimately, Trump’s executive order is a high-stakes gamble to deliver affordable drugs to Americans while preserving the innovation that fuels medical progress. Its success depends on whether the administration can translate bold rhetoric into actionable policy without destabilizing the pharmaceutical industry or triggering unintended global consequences. For now, the order represents a step toward addressing a uniquely American problem: a healthcare system where patients bear the burden of funding the world’s medicines. As the 30-day deadline looms, the nation watches to see if Trump’s promise to “do the right thing” will yield a fairer deal for its citizens.
With reporting by Le Monde and Reuters.

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