President Donald Trump celebrated a major milestone this month, making good on a campaign promise to act quickly to lower the cost of drugs for working Americans.
A new executive order directs U.S. Health and Human Services Secretary Robert F. Kennedy, Jr. to implement so-called “most-favored-nation” status at his agency. Under this strategy, drug prices would fall far lower using a standard put forth by the Organization for Economic Co-operation and Development, which includes most nations with strong economies.
“You can have, within a period of weeks, you can have drug costs that drop like a rock,” he said at a May 12 signing ceremony.
Before signing his order, Trump lamented the struggle of working-class Americans to afford necessary prescription drugs, ironically a talking point used against him by Democrats during this month’s budget debate in the U.S. House. His latest action may be seen as an attempt to allay fears about expected cuts to Medicaid, which he has insisted are focused solely on able-bodied recipients.
“We are going to now get a reduction in drug costs of up to 89 percent in some cases, but 50 percent would be a low, a bad number,” Trump said.
“It’s going to be massive numbers. It’s going to be incredible for Medicaid, incredible for all forms of health care. Medicare is going to be — it’s going to have a huge impact, so big that nobody can calculate it.”
RFK has been directed to partner with Dr. Mehmet Oz, Trump’s Medicare and Medicaid Services Administrator, to make the order feasible.
“OK, so you as a group, I have great confidence. And if you don’t do it, I am firing every single one. Good luck, guys,” he joked to both men.
In a news release, Kennedy underscored the importance of the reform in helping Americans afford their monthly prescription drug costs.
“For too long, Americans have been forced to pay exorbitant prices for the same drugs that are sold overseas for far less,” he said. “That ends today. We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do.”
A fact sheet released by the White House described the American drug pricing system as one of the most expensive in the world, a fact supported by a study of 2022 global drug prices conducted by RAND.
“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 document.
“So we would spend tremendous amounts of money in order to provide inexpensive drugs to another country. And when I say the price is different, you can see some examples where the price is beyond anything — four times, five times different.”
Through the “most-favored nation” model, the Trump administration plans to pursue “most-favored-nation price targets … to bring prices for American patients in line with comparably developed nations.”
The president accused major drug manufacturers of exercising “global freeloading,” warning them in the order “should drug manufacturers fail to offer American consumers the most-favored-nation lowest price, my Administration will take additional aggressive action.”
“The United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits. This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets and subsidize that decrease through enormously high prices in the United States,” Trump wrote, according to the Western Journal.
“This abuse of Americans’ generosity, who deserve low-cost pharmaceuticals on the same terms as other developed nations, must end. Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories.”
