Donald Trump seeks to align US drug costs with cheapest ones abroad

Business Standard

12-05-2025

The US government already negotiates prices for some of the highest-cost medicines used in Medicare health insurance under the Inflation Reduction Act
Bloomberg
By Rachel Cohrs Zhang, Derek Wallbank and Hadriana Lowenkron
President Donald Trump said he plans to order a cut in US prescription drug costs by mandating that Americans pay no more than people in countries that have the lowest price.
Trump said in a social media post that he'll sign the executive order at 9 a.m. Monday in Washington.
While predicting that pharmaceutical prices could drop 30% to 80% in the US, Trump also said prices would likely 'rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!'
He said he'll institute what he called a most-favored nation policy 'whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World.' Healthcare costs in the US 'will be reduced by numbers never even thought of before,' he said.
Asian pharmaceutical companies fell in early Monday trading. Japanese drugmaker Chugai Pharmaceutical Co. dropped as much as 7.2%, the most in a month, with peers Daiichi Sankyo Co. and Takeda Pharmaceutical Co. losing around 5%. In South Korea, SK Biopharmaceuticals Co., Celltrion Inc. and Samsung Biologics Co. all fell over 3%.
The news also weighed on Chinese drugmakers. Among companies with commercial drugs in both the US and China, Hong Kong-listed shares of BeiGene Ltd fell as much as 8.8% while Hutchmed China Ltd dropped 5.6%. Jiangsu Hengrui Pharmaceuticals Co., China's largest pharma company, also saw its shares fall as much as 4.4% despite not currently marketing any medicines in the US.
Americans pay the most in the world for medicines, fueling innovation and driving the growth of the pharmaceutical industry. Drugmakers have said revamping the system will slash revenue and stifle the development of breakthrough therapies that have the potential to lengthen and improve lives.
Trump cited the industry's argument, but said it meant that 'the 'suckers' of America' ended up bearing those costs 'for no reason whatsoever.'
The US government already negotiates prices for some of the highest-cost medicines used in Medicare health insurance under the Inflation Reduction Act, which passed in 2022 under former President Joe Biden, with more slated to be added every year. The first two rounds of drug price negotiations haven't included physician-administered drugs, but the next round might.
Trump's Truth Social post — preceded by an earlier one that promised 'one of the most important and impactful' posts he has ever issued — didn't detail how the order would work.
He also didn't specify potential limits on the policy, such as whether it would apply only to government programs such as Medicare or Medicaid, if it would be limited to certain drugs or categories of drugs or if the White House sees a way to apply this more broadly.
Billionaire hedge fund manager Bill Ackman suggested Trump might have been inspired by an idea he floated on X in March, when he said the best way to reduce US drug prices 'is to make it illegal for drug companies to sell the same drugs abroad for lower prices than they sell them for here.'
In his first term, Trump proposed a Medicare pilot program for drugs with no low-cost generic competition that are given in doctor's offices, saying he wanted to bring prices in line with countries like France and Japan where they cost dramatically less.
That plan, which would have phased in over three years, aimed to ensure Medicare paid the lowest price offered to a group of 22 nations.
The effort was struck down in federal court after drug companies challenged it, claiming the administration hadn't properly carried out the rulemaking process. The Biden administration didn't appeal that finding, and instead pursued legislation that led to the Inflation Reduction Act.