President Donald Trump signed an executive decree on Monday which could shake up the foundations of the American pharmaceutical pricing model, establishing a 30 -day deadline so that drug manufacturers reduce the cost of prescription drugs of 59% or face new regulations on prices related to what foreign governments pay.
This decision marks the most aggressive pressure of the administration to date to approach what Trump calls “a rigged system” which forced the Americans to pay more than any other country for the same drugs.
During the White House press briefing, Trump said the United States would no longer be the “piggy bank” of the pharmaceutical industry, describing order as a major correction which “would equalize” the price of drugs on a global scale.
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“We are all going to pay the same thing. We are going to pay what Europe pays,” said Trump, flanked by the health secretary Robert F. Kennedy Jr., the CMS administrator, Dr. Mehmet Oz, the FDA commissioner, Dr. Marty Makary, and the director of Nih Jay Bhattacharya.
The decree requires the Ministry of Health and Social Services (HHS) to negotiate new prices for drugs. If negotiations with drug manufacturers fail within 30 days, the administration will implement a new regulation which links the prices of American drugs at much more basal prices by European countries and elsewhere – a controversial model nicknamed the rule of the “most favored nation”.
Although the potential savings for Medicare and Medicaid can be substantial, it is not difficult to know what part of this recovery will fall to millions of Americans covered by private insurance, where the government lever effect on prices is limited. However, Trump said that the order “would allow taxpayers to billions of dollars” and to “reduce health costs by the number of numbers that had never even thought before”.
No official analysis was published by the White House on the amount of the Order, or which drugs would be affected, although Trump and his advisers suggested that the measure could cover injectable at high cost, cancer treatments and other expensive drugs administered under Medicare.
POSSERBACK and unanswered questions from the industry
The pharmaceutical industry, a powerful lobbying force in Washington, has already started to grow back. In a statement published on Sunday, Stephen J. Ubl, Chairman and Chief Executive Officer of Pharmaceutical Research and Manufacturers of America (Phrma), criticized the plan as a “bad deal” which could harm patients and stifle innovation.
“Importing foreign prices will reduce billions of dollars in health insurance without guarantee that it helps patients or improves their access to medicines,” said Ubl. “It endangers the hundreds of billions of people that our member companies plan to invest in America, which makes us more dependent on China for innovative drugs.”
UBL’s warning echoes the long -standing argument for drug manufacturers that high American prices are essential to finance the research and development of new drugs – an assertion that Trump has rejected as hollow.
“Pharmaceutical companies make most of their profits from America,” said Trump on Monday. “It’s not a good thing.”
What remains uncertain is the extent to which the order of the president, if implemented, will harm the results of the industry. Analysts claim that linking the prices of drugs to international references could take a blow for the growth of income from pharmaceutical companies, especially since many depend strongly on high margin sales in the United States to compensate for lower yields at the foreigner.
The pharmaceutical industry worldwide is estimated at around 1.5 billion of dollars, American companies representing a significant part of this total. Giants like Pfizer, Merck, Johnson & Johnson, Abbvie and Eli Lilly have experienced massive stock market capitalizations, the five main American pharmaceutical companies of collectively more than 1 dollars at the start of 2025. Any interruption of their American price model probably sent effects on the global financial markets.
Trump’s criticisms note that the announcement, like many of his previous attempts to face Big Pharma, can be faced with serious legal and logistical obstacles.
Legal clouds above decrees
Trump’s previous attempt to implement a “most favored” price policy during the last period of his first mandate in 2020 was blocked before the Federal Court. At the time, the industry has successfully argued that the rule would give foreign governments an undue influence on the way drugs are assessed in the United States, and a judge interrupted the plan for procedural reasons. The administration of President Joe Biden later abandoned him.
This time, Trump seems more determined to see him. It is also supported by a restructured health leadership team which includes Kennedy, Oz and Makary – all francs on health care and transparency.
Speaking on Monday, Oz said that HHS will go directly to pharmaceutical leaders over the next 30 days to demand revised prices according to international benchmarks. If the talks decompose, the administration will carry out regulatory changes, bypassing the congress, where several Bipartisan efforts to reduce the costs of drugs have failed.
The legal gray area to find out if a decree can force such price changes, in particular outside of Medicare and Medicaid, remains unresolved. But Trump, a banking on the frustration of the public concerning the costs of drugs, seems willing to test the limits.
Political capital compared to corporate lobbying
Trump’s message was that the United States has been subsidized for the rest of the world for too long. He accused pharmaceutical companies of misleading messaging on R&D costs and promised not to be influenced by the contributions of the industry campaign.
“For years, they said it was research and development costs,” he wrote on Truth Social Sunday. “And that all these costs were and would, without any reason, be carried by the” binds “of America, alone.”
“The contributions of the campaign can do wonders, but not with me, and not with the republican party,” added Trump. “We are going to do the right thing.”
The pharmaceutical hall is one of the most powerful in Washington. According to Opensecrets, the industry spent more than $ 375 million on lobbying in 2023 only, more than any other sector, and has regularly ranked among the best donors of both parties.
The potential impact on global drug pricing strategies and health care costs in the United States is difficult to foresee. While Americans pay more for drugs, economies often go to innovation that benefits the world’s populations. Many believe that the weakening of the financial base could slow down the pipeline for new treatments.
But Trump supporters say the current system is untenable.
