Trump wants to slash prescription drug prices in US. What it means for your pharmacy bill?

Time of India

13-05-2025

US President Donald Trump signed a broad executive order Monday directing drugmakers to lower the prices of their prescription drugs to align with what other countries pay. Citing figures that patients in other countries pay much less than Americans for pharmaceuticals, Trump said he would order drug companies to reduce their prices inside the US.
The order said the Trump administration will give drugmakers price targets within a month and, if they fail to make "significant progress", may pursue regulatory actions or measures like importing medicines. However, analysts and legal experts say such steps would be difficult to implement.
Since taking office in January, Trump has reiterated that he wants to end this inequity. On Sunday, he announced on Truth Social that he would sign an executive order to pursue "most favoured nation" pricing. Also known as international reference pricing, it seeks to narrow the gap between the U.S. and foreign drug prices.
Will this affect your pharmacy bill?
Trump took aim at that pricing disparity with an executive order on May 12 that aims to lower drug prices for U.S. consumers and taxpayers, sharing on social media that they'd be cut by "59%, PLUS!" and later at the White House adding, "I guess even 90%."
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But some doubt how much customers will benefit from the order. According to USA Today, pharmaceutical experts state that the executive order will not immediately affect the prices consumers pay at pharmacies or through mail-order services. The president has urged the drug industry to voluntarily reduce prices for American consumers, warning that failure to do so could result in a wave of regulatory measures aimed at enforcing price cuts.
"The president thinks of pharmaceutical price differences between countries the same way he thinks of our trade imbalances with other countries," John Barkett, managing director at the management consulting firm BRG and a former senior policy advisor in the Biden White House told USA Today "If we pay more than other countries, then he thinks we're getting ripped off."
How will Trump's order cut drug prices in the US?
The United States trade representative and the Department of Commerce have 30 days to give drugmakers price targets "to bring prices for American patients in line with comparably developed nations," the order said. If they don't make significant progress toward those goals within six months, drugmakers could face actions from several federal agencies. The requested drug discounts could range for 59% to 80% from list prices.
Trump said other wealthy nations should pay more for prescription drugs. He called his executive order, which aims to charge Americans less and other nations more, "equalization."
If drugmakers refuse to lower their prices, the order instructs the Health and Human Services Department, led by Robert F. Kennedy Jr., to develop federal regulations that would align
US drug prices
with those in other developed countries.
To enforce this policy, the Trump administration would rely on federal regulatory agencies. Pharmaceutical companies that fail to meet the established price benchmarks could be investigated by the Federal Trade Commission for anti-competitive behavior. Additionally, the Food and Drug Administration could conduct reviews that may lead to the modification or revocation of approvals for drugs deemed unsafe, ineffective, or improperly marketed.
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How will these actions affect what I pay at the pharmacy counter?
The executive order will have "no immediate impact on the American consumer," Barkett said. The cost consumers pay for prescription medications varies based on their health insurance plans, which typically require either copayments or a percentage of the total pharmacy bill. Additionally, drug prices often include complex, non-transparent rebates that are not publicly disclosed.
The amount consumers pay for prescription medications depends on their health insurance coverage, which usually involves either a fixed copayment or a percentage of the total cost. Furthermore, drug pricing is often influenced by complex and opaque rebate systems that are not publicly disclosed.
Approximately 7 million older adults enrolled in Medicare used these medications, paying a share of the cost either at the pharmacy or through mail-order services.
U.S. Rep. Lloyd Doggett, D-Texas, said Trump talks about lowering drug prices "but fails to accomplish anything."
"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."
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Does US pay more for medicines?
Yes. The US pays the most for prescription medicines in the world, often nearly three times that of other developed nations.
Top-selling blood thinner Eliquis from Bristol Myers Squibb and Pfizer carries a U.S. list price of $606 for a month's supply. The previous administration of Democratic President Joe Biden negotiated that down to $295 for Medicare, which goes into effect in 2026, but the drug costs $114 in Sweden and just $20 in Japan, according to Reuters.
How is this different from previous price reduction efforts?
Biden's Inflation Reduction Act empowers the federal government to negotiate prices for some of the most expensive drugs covered by Medicare.
However, even after these negotiations, the prices of the first 10 targeted prescription drugs remain, on average, more than twice as high — and in some cases up to five times higher — than the prices agreed upon in four other high-income nations, according to a previous report by Reuters.
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How has the pharmaceutical industry responded?
The industry has pushed back strongly against the idea of significantly lowering U.S. drug prices. As the largest pharmaceutical market in the world, the U.S. is seen as vital to industry profits.
Two industry insiders told Reuters last month that such pricing reforms are more troubling for drugmakers than other potential policy moves, such as tariffs on imported medicines.
PhRMA, the leading U.S. lobby group for drug manufacturers, argued that lowering prices domestically requires tackling what it sees as the root issues: other countries not contributing their fair share and intermediaries inflating costs for American consumers.
John Crowley, CEO of BIO — the main U.S. biotech trade group — added, 'The 'most favored nation' approach is deeply flawed and would severely harm small and mid-sized biotech companies in the U.S.'
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What are the obstacles to implementing this policy?
Experts caution that using international drug prices as a benchmark is not straightforward. Many drugs available in the U.S. are not sold abroad, and some countries either don't disclose pricing data or take years to finalize drug prices.
Unlike countries such as England and Germany, where the government directly purchases drugs for national healthcare systems, the U.S. relies heavily on private-sector negotiations for both public and private health plans.
Analysts note that rolling out such a wide-ranging order will be complex, and legal experts warn that it may face court challenges — especially if it appears to exceed statutory limits, including those related to importing drugs from other countries.
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