How Trump’s Drug Price Plan Will Encourage Fair Pricing: What It Means for You and Big Pharma

President Donald Trump is set to reveal a new plan aimed at lowering prescription drug prices in the U.S. This initiative will link the costs the government pays for certain medications to prices in other countries, a strategy he attempted without success during his first term.

Trump plans to sign an executive order next week that would direct federal health officials to adopt a “most favored nation” pricing model for some drugs under Medicare. This means that the U.S. would pay no more than the lowest prices found in other wealthy nations. This move was initially reported by Politico.

Prescription drug prices in the U.S. are significantly higher than those in other countries, often costing up to ten times more. According to the Rand Corporation, a public policy think tank, this discrepancy highlights a major issue in American healthcare.

Trump initially sought to implement this pricing strategy in 2020 as part of broader efforts to reduce drug costs. However, a federal judge halted those plans after a lawsuit from the drug industry.

The new plan could once again focus on Medicare Part B drugs, such as those used for chemotherapy, which are administered in healthcare facilities. The previous estimate suggested this policy could save taxpayers over $85 billion over seven years.

Health policy experts have largely supported Trump’s approach. Arthur Caplan, head of medical ethics at NYU Langone Medical Center, stated, “There’s no good reason for why prices should be so inflated in the U.S. compared to other countries. This could address a pressing issue: the rising costs of medications contributing to inflation.”

Yet, some experts predict strong resistance from the pharmaceutical industry. Stacie Dusetzina, a health policy professor at Vanderbilt University, expressed skepticism about whether this new executive order would be more successful than the previous attempt.

Public sentiment may favor the plan. A KFF poll found that more than 75% of adults in the U.S. view medication costs as unaffordable. Tricia Neuman, director of the program on Medicare policy at KFF, noted that while the idea polls well, it faces potential pushback from drug manufacturers.

The Pharmaceutical Research and Manufacturers of America, the industry trade group that previously challenged Trump’s pricing rule, suggests that addressing high drug costs should focus on pharmacy benefit managers (PBMs). These middlemen negotiate drug prices with insurance companies, but they have also been criticized for potentially driving prices higher.

In addition to Trump’s executive order, the Biden administration has introduced its own strategy to negotiate Medicare drug prices. This provision, part of the Inflation Reduction Act, is expected to save Medicare $6 billion in 2026 when the prices are implemented.

Caplan emphasized the need for a multi-faceted approach: “We can tackle price disparities while negotiating for the lowest comparable prices.”

Lastly, just last month, the Centers for Medicare and Medicaid Services (CMS) rejected a proposal under the Biden administration to cover weight loss drugs under Medicare, which could have resulted in substantial savings for patients.

For ongoing updates, you can refer to sources like the Rand Corporation and the KFF.

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