Trump's Announcement: Lowering Prescription Drug Costs for American Citizens to Secure Global Top Prices
President Donald J. Trump's efforts to address the high cost of prescription drugs in the U.S. gained momentum with the signing of an Executive Order on May 12, 2020. The Order, titled "Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients," aimed to reduce U.S. drug prices by aligning them with the lowest prices paid by comparable developed countries.
The Order revived and expanded a previous MFN initiative that was limited to certain Medicare drugs and was blocked in courts and later rescinded by the Biden administration. The 2020 EO was broader in scope, not limited to Medicare drugs, and included enforcement mechanisms if pharmaceutical companies failed to comply.
In 2025, President Trump sent letters to 17 pharmaceutical companies demanding they reduce their drug prices within 60 days to match the lowest international prices. The White House warned of deploying all available tools to enforce compliance if companies did not comply. This initiative caused a notable negative market reaction, with stock prices of several big pharma firms dropping between 1% and 4% and the S&P 500 Pharmaceuticals Index falling over 2%.
However, the actual impact on lowering prescription drug prices for American consumers has been limited and remains uncertain. Industry experts and analysts have expressed skepticism about the EO's enforceability without congressional support, describing it as “more bark than bite.” The private market pricing and complex supply chains, including pharmacy benefit managers (PBMs), complicate the direct negotiation and enforcement of such pricing mandates.
The Order's call for a direct-to-consumer sales model to bypass PBMs represents an attempt to disrupt the existing drug distribution system, aiming to increase transparency and reduce out-of-pocket patient costs. Furthermore, trade policy will be used to support manufacturers in raising prices internationally if increased revenues are reinvested into lowering prices for American patients and taxpayers.
In essence, President Trump's efforts have placed significant political and regulatory pressure on the pharmaceutical industry to lower drug prices in the U.S. to levels comparable to other developed nations. While these actions generated market unease among drugmakers and signaled a strong intent to reduce drug costs, the actual impact on American consumers remains uncertain due to legal, market, and regulatory challenges.
- The health-and-wellness industry has been the subject of intense scrutiny following President Trump's efforts to reduce prescription drug prices in the U.S.
- The science behind pharmaceutical pricing and international comparisons has been a hot topic in policy-and-legislation discussions due to President Trump's Executive Order.
- Some experts in the nutrition field argue that the president's initiatives could have broader implications for personal-finance and wealth-management strategies, as it affects people's access to affordable medication.
- The finance and investing industry has been closely monitoring the impact of the Order, as changes in drug prices can inadvertently influence the stock market, such as the drop observed in several big pharma firms.
- The business world generally is keeping a close eye on ongoing developments in politics regarding prescription drug pricing, as it can impact general-news headlines and public opinion.
- The healthcare sector is facing demand for transparency and lower prices due to President Trump's commitments, which opens up opportunities for startups in health-and-wellness specializing in disruptive business models, such as direct-to-consumer sales.
- The success of lowering prescription drug prices for American consumers through the Trump administration's policies will depend heavily on policy-and-legislation developments and cooperation from pharmaceutical companies.
