Trump Signs Executive Order to Tie U.S. Drug Prices to Lowest International Rates
- The New York Editorial Desk - Arif
- May 12
- 2 min read
Tone & Political Bias: Moderately Right-Leaning
Why: The article focuses on Trump’s executive action as a direct response to high domestic drug costs, emphasizes deregulation, and frames pharmaceutical companies as part of the problem, aligning with conservative populist messaging.
Overview
On May 12, 2025, former President Donald Trump signed an executive order aimed at reducing the cost of prescription drugs in the U.S. by matching them to the lowest prices paid by developed countries. This policy, often called the “Most Favored Nation” (MFN) rule, seeks to tackle high drug prices for Medicare and Medicaid users.
Key Details
Policy Scope: The order instructs the Department of Health and Human Services (HHS) to ensure that Medicare and Medicaid do not pay more for certain drugs than what peer nations pay.
Deadline: HHS has 30 days to begin negotiating with pharmaceutical companies. If no agreement is reached, the MFN pricing system will be implemented unilaterally.
Drug Categories Affected: The focus is on drugs administered in clinical settings, including cancer therapies and other injectables under Medicare Part B. Common pharmacy-dispensed medications are not included yet.
Reasoning Behind the Move
Trump stated that Americans have long paid more for the same drugs that are cheaper in countries like Canada and Germany. The administration argues that the new policy levels the playing field and stops Americans from “subsidizing” cheaper global prices.
Potential Impact
Price Reductions: The administration estimates price drops of 30% to 80%, depending on the drug.
Government Savings: Trump claimed that the initiative could save taxpayers trillions of dollars.
Trade Strategy: The order also directs the Department of Commerce and U.S. Trade Representative to explore ways of raising drug prices abroad, effectively redistributing cost burdens.
Reactions
Pharma Industry Pushback: Drugmakers strongly oppose the move, saying it would disrupt innovation and lead to reduced investments in new treatments.
Administration Support: Health and Human Services Secretary Robert F. Kennedy Jr. and Medicare Administrator Mehmet Oz supported the policy. Kennedy, in particular, described it as a progressive step toward healthcare affordability.
Legal and Historical Background
This order revives Trump’s earlier MFN initiative from his first term, which federal courts blocked over procedural issues. The Biden administration later withdrew the plan. Legal challenges are expected again, particularly over the executive branch’s authority to enforce pricing rules without congressional approval.
Broader Significance
U.S. drug prices are among the highest globally due to a lack of centralized price controls. This order marks a shift toward more aggressive government involvement in drug pricing, a move that could influence future health policy debates across party lines.
What’s Next
Over the next 30 days, HHS will negotiate directly with drug companies. If no compromise is reached, the MFN pricing will be imposed. The policy's success hinges on legal sustainability and the willingness of pharmaceutical companies to comply.
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