President Donald Trump signed a sweeping executive order Monday aimed at cutting prescription drug prices across the U.S. by as much as 90%, extending far beyond Medicare to include Medicaid and private insurance plans.
The policy revives a controversial idea from Trump’s first term—one that never took effect due to legal blocks—and turns it into what analysts are calling the most aggressive federal move on drug pricing in decades.
“I’m doing this for the American people,” Trump said at the White House. “I’m doing this against the most powerful lobby in the world probably, the drug lobby.”
How Trump Plans to Match Global Drug Prices
The centerpiece of the order is a “most favored nation” model that ties U.S. drug prices to the lowest price paid by other wealthy nations. It directs Health and Human Services Secretary Robert F. Kennedy Jr. to set price-cutting benchmarks within 30 days, with a warning to drugmakers: negotiate or face enforcement.
Unlike earlier efforts, this policy applies to a broader range of drugs—including those covered by Medicaid and private insurance plans. Notably, GLP-1 weight-loss drugs like Ozempic, Wegovy, and Zepbound are expected to be included, though the administration did not confirm a specific list.
The Food and Drug Administration will also consider expanding importation of cheaper drugs from outside Canada, and the FTC and DOJ are directed to investigate anti-competitive practices among pharmaceutical firms.
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Big Promises, Bigger Pushback
On Truth Social, Trump claimed drug prices would drop “almost immediately” by 30% to 80%, later revising that number to 59% before declaring at the White House that the cuts could reach up to 90%.
“We will pay the same price as the nation that pays the lowest price anywhere in the world,” he wrote.
But experts cast doubt on those figures. Arthur Caplan, head of medical ethics at NYU Langone, said such dramatic price parity is “impossible” given the humanitarian discounts drugmakers offer to poorer countries.
“We are not going to get the price paid by South Africa, Peru, Egypt, Bolivia and Laos,” Caplan said. “The prices in the poorest nations have no chance of being the price paid by the Trump administration.”
Others raised concerns about supply chains, noting that pharmacies and clinics already holding inventory at higher prices could face significant losses.
“What the pharmacy or clinic paid to acquire their drugs is likely higher than the proposed new price,” said Stacie Dusetzina, a health policy professor at Vanderbilt. “They would lose money when those drugs were filled.”
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A Legal Fight on the Horizon
Health policy experts expect the pharmaceutical industry to challenge the executive order in court, as it did with Trump’s original policy. The scope of the new plan—particularly its reach into private insurance—is expected to face steep legal hurdles.
“If this touches all drugs for all people, it’s far more ambitious,” said Tricia Neuman of KFF. “But the ripple effects are far more uncertain.”
Trump administration officials defended the policy as a corrective to what they called “inadequate” reforms under Biden’s Inflation Reduction Act, which is estimated to save Medicare $6 billion by 2026 through negotiated pricing.
“We’ll be taking action to go beyond what was achieved under the Inflation Reduction Act,” a senior official said Monday.
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Political and Industry Reaction
The Pharmaceutical Research and Manufacturers of America, which previously sued the Trump administration, did not immediately comment. Last week, a spokesperson for the group said the White House should focus on pharmacy benefit managers (PBMs)—the intermediaries accused of distorting drug prices—rather than targeting drugmakers directly.
PBMs, while theoretically meant to reduce patient costs, have drawn bipartisan scrutiny after reports found they may be contributing to price inflation through secretive rebate arrangements.
As the administration prepares for a likely legal and legislative fight, negotiations with drugmakers are set to begin within weeks, with the clock ticking toward Kennedy’s 30-day mandate.
