Details on the executive order

According to a White House fact sheet, recent data shows that Americans pay three times the price for brand-name drugs as other OECD nations — even after accounting for discounts manufacturers provide in the United States — despite the fact the United States funds roughly 75% of global pharmaceutical profits.

However, pharmaceutical companies argue that higher prices in the United States come with added benefits, with industry-funded analyses finding that American patients get medicines faster and with fewer insurance restrictions than patients in other countries.

The executive order calls on federal agencies to investigate why European countries get lower drug prices than Americans and "ensure foreign countries are not engaged in practices that purposefully and unfairly undercut market prices and drive price hikes in the United States." As a result, officials expect prices to rise internationally.

"We have all the cards," Trump said regarding trade negotiations. "They're going to have to pay more for health care and we're going to have to pay less — that's all it is."

According to a White House official who spoke in a briefing for reporters on condition of anonymity, HHS will negotiate direct-to-consumer prices "where appropriate," aiming for prices comparable to other countries.

HHS Secretary Robert F. Kennedy Jr. will be directed to set price targets for all U.S. markets within 30 days, which will then open negotiations with the companies. The new policy would aim to make drugs more available to consumers at a "most favored nation" price throughout HHS.

During his first term, Trump unsuccessfully attempted to enact a most favored nation policy to reduce drug prices for Medicare. The plan would only have applied to 50 drugs administered at clinics and hospitals paid for by Medicare, however a federal court blocked the policy, ruling the administration had skipped steps in the policymaking process.

"There will be an expectation that those prices should come down. And then if they don't, we will be looking at our various policy levers that can be used to force those prices down," the official said. "We absolutely are going to get a better deal."

The White House official said the Trump administration will specifically focus on drugs where price disparities are the largest between countries and those that account for the largest expenditures in the United States, which likely will include GLP-1s.

Reaction

Despite concerns that a most-favored nation policy could have significant impacts on the drug industry, the XBI, an index of biotech stocks, was up over 4% following the order and shares of large pharmaceutical companies also rose, suggesting that investors had anticipated the announcement of the policy and are skeptical that it can successfully be implemented, STAT reports.

"Importing foreign prices from socialist countries would be a bad deal for American patients and workers," Ubl said. "It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America."

Similarly, the Biotechnology Innovation Organization, an industry trade group, said the order is "importing socialized medicine" and would ultimately "empower China."

In a statement, Eli Lilly said it "agrees with the policy objective" that research costs should be shared more fairly across developed countries but said that a most-favored nation approach is not the answer and that policies should be aimed at pharmacy benefit managers.

AstraZeneca in a statement said it shares Trump's commitment to making sure costs are "fairly shared among high-income nations" and that a pricing policy would need to be implemented with thorough stakeholder engagement.

Sen. Peter Welch (D-Vt.), who recently introduced a bill alongside Sen. Josh Hawley (R-Mo.) that would limit drug prices in the United States to an average of the prices paid by a group of peer countries, said he agreed that Americans are overpaying for drugs and that international comparisons could help set fairer prices, but added he believes this should be tackled by Congress.

"It's really important to do this legislatively," he said.

In a post on X, former FDA Commissioner Scott Gottlieb, a board member at Pfizer, said the Trump administration should use the executive order as a way of negotiating policy where drugmakers would launch at a single price in high-income countries in return for trade protections.

According to Gottlieb, the policy "appears to largely rely on [importation], for now, which will be hard to implement while still guaranteeing the safety and provenance of drugs, and protecting against counterfeits. But it's a chance to negotiate a broader solution."

Rachel Sachs, a health law expert at Washington University, said that Americans aren't likely to see relief on rising drug costs quickly because of this order.

"It really does seem the plan is to ask manufacturers to voluntarily lower their prices to some point, which is not known," Sachs said. "If they do not lower their prices to the desired point, HHS shall take other actions with a very long timeline, some of which could potentially, years in the future, lower drug prices."