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    Trump Signs Sweeping Order to Slash Drug Prices, Pressure Pharma Giants

    Giann Liguid
    May. 14, 2025 09:15AM PST

    Trump has signed an executive order geared at reducing drug prices for Americans, targeting foreign countries and manufacturers. Critics are skeptical of its immediate impact.

    Various blister packs with pills and capsules in different colors and shapes.
    Roberto Sorin / Unsplash

    US President Donald Trump has signed a sweeping executive order aimed at dramatically reducing prices for prescription drugs, vowing to end “foreign free-riding” on American pharmaceutical innovation.

    The order directs federal agencies to pressure both drug manufacturers and wealthy foreign countries to bring their prices in line with those paid in the US, or face aggressive trade and regulatory actions.

    “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 abroad with skyrocketing prices at home,” Trump states in the order.


    The directive, which was shared on Monday (May 12), requires the administration to notify pharmaceutical companies of price targets meant to reflect the costs paid by economically comparable countries.

    Companies have been given 30 days to receive these targets and six months to show meaningful progress or risk enforcement from agencies such as the Federal Trade Commission and the Food and Drug Administration.

    The order would, if fully implemented, allow American patients to bypass traditional pharmacy middlemen and purchase medications directly from manufacturers at what Trump describes as “most-favored-nation” prices — this approach would tie US prices for some medicines to lower prices offered in other countries.

    If companies refuse to comply voluntarily, the Department of Health and Human Services, now led by Robert F. Kennedy Jr., is tasked with proposing regulations to impose these prices and take “other aggressive measures” to lower drug costs, including investigations for anti-competitive behavior and potential revocation of drug approvals.

    Trump has promoted the order as a cornerstone of his policy agenda to “put American patients first.” On social media, he claimed drug prices could fall by “59%, PLUS!” and added during a press briefing, “I guess even 90%.”

    Despite the bold claims, experts and critics remain skeptical about the policy’s immediate effect on consumer costs.

    John Barkett, managing director at consulting firm BRG and a former Biden administration advisor, likened Trump’s logic on pharmaceutical pricing to his views on international trade deficits.

    “If we pay more than other countries, then he thinks we're getting ripped off,” Barkett commented.

    He added that the executive order “will have no immediate impact on the American consumer,” citing how drug pricing is shaped more by insurance structures, pharmacy benefit managers (PBMs) and hidden rebates than by list prices alone.

    Indeed, the US drug pricing system is notoriously opaque. While Americans pay more than US$1,300 per capita annually on prescription drugs — more than double the average in other wealthy countries — the prices they actually pay at the pharmacy depend on a convoluted web of negotiated discounts, insurance copays and third-party rebates.

    There are widespread consequences to the current setup. A 2023 survey by the Commonwealth Fund found nearly two in five Americans reported skipping or delaying prescriptions due to cost.

    Nevertheless, critics argue Trump’s order may be more symbolic than substantive. US Representative Lloyd Doggett (D-TX), a longtime advocate for drug price reform, dismissed the action as another performative gesture.

    “Rather than changing the law, Trump issues another press release that will offer consumers little or nothing,” Doggett said. “Begging Big Pharma to show some benevolence to the taxpayers and consumers, whom they continue to price gouge, will do nothing to assure access to affordable medications.”

    Internationally, Trump’s push has sparked uncertainty among America’s trading partners and pharmaceutical exporters. European governments have scrambled to interpret the implications of the order, especially Trump’s stated goal to force other wealthy nations to “pay more” for their medications.

    “The uncertainty caused by the US is bad for the world,” said Danish Industry Minister Morten Bødskov in an interview with Reuters, confirming plans to meet with Denmark-based drugmakers in response to the order. “Danish pharmaceutical companies are among the best in the world … The message from Trump does not change that.”

    Trump’s order revives a controversial proposal from his first term that would have pegged the prices of certain Medicare-covered drugs to an international pricing index. That initiative was blocked by a federal court before it could take effect.

    This time, policy experts caution that the order’s ambitious goals may be difficult to realize without congressional action or structural reforms to the domestic drug pricing ecosystem — such as changes to PBMs or patent law.

    Don't forget to follow us @INN_LifeScience for real-time news updates!

    Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

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    Giann Liguid

    Giann Liguid

    Writer

    Giann Liguid is a graduate of Ateneo De Manila University with an AB in Interdisciplinary Studies. With a diverse writing background, Giann has written content for the security, food and business industries. He also has expertise in both the public and private sectors, having worked in the government specializing in local government units and administrative dynamics.

    When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.

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    Giann Liguid
    Giann Liguid

    Writer

    Giann Liguid is a graduate of Ateneo De Manila University with an AB in Interdisciplinary Studies. With a diverse writing background, Giann has written content for the security, food and business industries. He also has expertise in both the public and private sectors, having worked in the government specializing in local government units and administrative dynamics.

    When he is not chasing the next market headline, Giann can most likely be found thrift shopping for his dogs.

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