New Executive Order Aims to Cut U.S. Drug Prices

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In an effort to lower the high cost of prescription drugs in the U.S., President Donald Trump has signed a new executive order aimed to make sure Americans and taxpayers don’t pay more for medications than people in other wealthy countries.

Why Was This Order Issued?

Prescription drug prices in the U.S. are often much higher than in countries with similar incomes, such as Canada, Germany and the United Kingdom. Data have shown that Americans can pay up to three times more for the same brand-name drug — even when discounts are factored in.

One reason this happens is that drug companies offer steep discounts to foreign countries to enter those markets. Then, to make up for the lost profits, they often charge much higher prices in the U.S.

What Does the Executive Order Do?

This executive order outlines several new policies aimed at reducing drug prices for Americans:

• “Most-favored-nation” pricing: The Secretary of Health and Human Services will establish rules designed to encourage drug manufacturers to sell medications in the U.S. at the lowest price they offer to any wealthy country. If they do not, the government says it may require them to do so through new rules.
• Direct purchases by patients: American patients may be able to buy medications directly from manufacturers at this reduced price, avoiding added costs from middlemen like pharmacy benefit managers.
• Stronger negotiation and oversight: The Secretary of Health and Human Services is directed to enforce these changes and propose new rules if manufacturers do not cooperate.
• Transparency and importation: The order builds on past efforts to increase price transparency, expand drug importation programs, and make generic and biosimilar drugs more accessible, particularly for low-income patients.

A Look at the Numbers

• According to the announcement, the U.S. makes up less than 5% of the world’s population but accounts for about 75% of global pharmaceutical profits.
• Drug companies often sell their medications at lower prices to other countries, then make up for the lost profits by charging Americans much higher prices.

This executive order aims to change that dynamic by demanding better deals from pharmaceutical companies and preventing unfair pricing practices.

What’s Next?

If the policies outlined in this executive order are fully implemented, American patients could see:

• Lower out-of-pocket costs for medications (including significant discounts to low-income patients for lifesaving medicines)
• More competition through generic and imported drugs
• Greater transparency about drug pricing

However, for these goals to be achieved, further steps — including potential new rules, cooperation from drug companies and follow-through by government agencies — will be required.

This executive order is part of ongoing efforts to address high drug prices in the U.S. While it’s not a guarantee of immediate change, it sets the stage for future policies that may give American patients better access to affordable medications.