Trump’s Drug Pricing Order Promises Dramatic Cuts, But Details Remain Scarce

President Trump signed an executive order aimed at slashing U.S. prescription drug prices by forcing pharmaceutical companies to match the lowest prices paid in other developed nations. During a May 12 press conference, Trump claimed some drug prices could be cut “almost immediately” by 50% to 90% through this “most favored nation” pricing strategy.

“Big Pharma will either abide by this principle voluntarily, or we’ll use the power of the federal government to ensure that we are paying the same price as other countries,” Trump stated, suggesting that the incentive for compliance would be U.S. assistance with trade negotiations.

While experts confirm that prescription drugs are indeed significantly more expensive in the United States than elsewhere, the implementation path for Trump’s proposal remains unclear, raising questions about its feasibility and potential impact.

According to a 2024 RAND report, U.S. drug prices average 2.78 times higher than in 33 other developed nations. For brand-name drugs specifically, Americans pay about 4.22 times more before manufacturer discounts.

“For individual drugs, you can find examples of 5, 6, 7 or 8 times higher prices. But the actual average across all of the OECD countries and all drugs is in this 3 times range,” said Andrew W. Mulcahy, senior health economist at RAND.

Importantly, the price disparity primarily affects brand-name drugs, which account for 87% of U.S. prescription drug spending despite representing only 10% of prescriptions. Generic medications, which make up 90% of U.S. prescriptions, are actually cheaper in America than in most other countries.

Trump highlighted Ozempic as an example, claiming it costs 10 times more in the U.S. than in other developed nations. A KFF analysis supports this assertion for some countries, noting that the U.S. list price is about 10 times higher than in Sweden, the U.K., Australia, and France, and 5-6 times higher than in Japan and Canada. However, list prices don’t account for rebates and discounts that often reduce actual costs.

The executive order requires the Health and Human Services secretary to communicate “most-favored-nation price targets” to pharmaceutical manufacturers within 30 days. If significant progress isn’t made, the secretary “shall propose a rulemaking plan to impose most-favored-nation pricing.”

Health policy experts note critical gaps in the plan’s specifics. “There really aren’t many details specified in this executive order as far as how these proposals for ‘most favored nation’ pricing will be implemented,” said Juliette Cubanski, deputy director of the program on Medicare policy at KFF.

Unanswered questions include which countries will be used to set target prices, which drugs will be targeted, and how new prices will interact with the current U.S. healthcare system involving multiple payers including private insurance, Medicare, and Medicaid.

The order also lacks clarity on enforcement mechanisms. While it mentions potential actions such as allowing drug imports, addressing anti-competitive practices, and possibly revoking drug approvals, experts question whether the administration has the legal authority to execute these measures.

Previous attempts at similar price controls have faced significant challenges. A “most favored nation” plan for certain Medicare drugs during Trump’s first administration was blocked by courts on procedural grounds and eventually rescinded by the Biden administration.

Healthcare economists also warn of potential industry responses that could undermine the plan’s effectiveness. A 2024 Congressional Budget Office report suggested manufacturers might delay launching drugs in foreign markets, withdraw from certain countries entirely, or create different drug versions to circumvent pricing comparisons.

“I expect this will do little to advance Americans affordably accessing needed medicines,” said Rena Conti, a health economist at Boston University.

While the potential savings could be substantial if successfully implemented—possibly reducing some drug prices by 53% to 86%—experts caution that administrative challenges, legal obstacles, and industry pushback could significantly limit the plan’s real-world impact on American consumers’ prescription costs.