Trump's Executive Order: A Sweeping Move to Cut U.S. Drug Prices Up to 90%

President Trump signed an executive order on Monday, aiming to reduce U.S. prescription drug prices up to 90%. The order, which Trump announced at the White House, ties what government pays for drugs to the lowest prices paid by other economically advanced countries through a most favored nation (MFN) policy. Pharmaceutical companies will have 180 days to negotiate with the Department of Health and Human Services (HHS) before the agency imposes a rulemaking plan to enforce MFN pricing. The initiative is designed to impact prices across Medicare, Medicaid, and commercial markets, but is expected to face legal challenges from the pharmaceutical industry and others.

Key Takeaways:

• The executive order aims to cut U.S. prescription drug prices up to 90% through an MFN policy.
• Pharmaceutical companies will have 180 days to negotiate with HHS before the agency imposes MFN pricing.
• The initiative will impact prices across Medicare, Medicaid, and commercial markets.
• Trump's order does not override federal law, setting the stage for potential legal challenges from the pharmaceutical industry and others.
• HHS Secretary Robert F. Kennedy Jr. and Sen. Bernie Sanders have expressed support for the effort.
• The biopharma industry has long argued that reducing prices will negatively impact the ability of drugmakers to discover and develop new drugs.

Statistics:

• The U.S. pays the highest prices for prescription drugs in the world.
• Trump's initiative aims to reduce prices by 50-90% immediately.
• Pharmaceutical companies have 180 days to negotiate with HHS before MFN pricing is imposed.
• The Inflation Reduction Act (IRA) will reduce the price of 10 select drugs by 38-79% starting in 2026.
• The pharmaceutical industry is set to face potential tariffs due to staff and funding cuts to the NIH and HHS.

Sources:

• (Source not provided as it is a note to clients from Jefferies, but not an original source)
• [White House officials, call with reporters]
• (Source not provided as it is a quote from Stephen J. Ubl, PhRMA CEO)
• [Politico, administration's attempts to convince Republicans to include an MFN clause in domestic policy package]
• [Executive Order, no specific date]