Trump order aims to cut drug costs

Prices in U.S. far higher than in many countries

By: Swapna Venugopal Ramaswamy
and Ken altucker
USA Today

..... President Donald Trump signed an executives order May 12 [2025] directing drug-makers to lower the prices of their medicines so they line up with what other countries pay.
..... Trump's order gave the Office of the U.S. Trade Representative and the Department of Commerce 30 days to give drug-makers the price targets, with the government taking further action to lower prices if those companies do not make "significant progress" toward those goals within six months.
..... Drug prices in the United States are nearly three times higher than in 33 comparison countries, according to a 2024 report from the Health and Human Services Department.
..... Calling the process "equalization,' Trump said at a White House signing event that other countries would have to pay for research and development: "The United States will no longer subsidize the health care of foreign countries, which is what we were doing."
..... How much prices will charge remained unclear. Trump put the figure at 59-80% before adding, "I guess even 90%.
..... Secretary of Helaht and Human Services Robert F; Kennedy Jr. will set price reduction targets within 30 days, a White house official said on May 12. [2025] If adequate progress is not made toward the targets, the health secretary will impose most favored nation pricing via rule-making, according to the official.
..... During his first term, Trump pushed a similar "most favored nation" rule for drug prices hat would have applied to Medicare payments. It was rescinded by the Biden administration. The new executive order builds on that policy by not limited it to certain drugs under Medicare but also including Medicaid and private sector insurance, said White House spokesperson Kush Desai.
..... Critics of the "most favored nation" concept argue that drug companies could game the system by securing deals with foreign government for rebates to maintain current drug pricing in the United States. Others say it could stifle innovation in medicine if the pharmaceutical industry loses profits.
..... The Inflation Reduction Act of 2022 empowered Medicare to negotiate prices with pharmaceutic companies on a limited number of mediations. The Biden administration then negotiated lower prices on 10 widely prescribed drugs, which will take effect in 2026.
..... In January, [2025] Medicare announced another batch of 15 drugs subject to negotiation this year, [2025] including blockbuster diabetes and weight loss drug Ozempic and Wegovy.
..... Asked how Trump's order affects Biden's inflation Reduction Act negotiations, the White House officials said that after the first round of drug price negotiations, prices remained "in many cases, over 200% higher than what many foreign countires get."
..... Drug pricing experts said Trump's order does little to explain how it will affect the nation's complex web of pharmaceutical rebates and insurance discounts that limit how much consumers pay out of pocket. Those rebates and discounts are used to fund certain Medicaid programs and to lower health insurance programs and to lower health insurance premiums, said Antonio Ciaccia, CE'O' of 46brooklyn and a drug pricing expert.
..... If those pharmaceutical discounts and rebates disappear, Ciaccia said, it could jeopardize funding for other health priorities. He added that Trump's executive order does not explain how that funding gap might be addressed.
..... "I don't see a lot of the how,: Ciaccia said. "And the how is always the rub when it comes to fixing drug pricing problems in the U.S."
..... Senate Finance Committee Ranking Member Ron Wyden, D-Oregon, dismissed Trump's order as "all hat and no cattle."
..... "If Trump was serious about lowering drug prices, he would work with Congress to strengthen Medicare drug price negotiations, not just sign a piece of paper," he said in a statement.

..... Contributing: Joey Garrison, USA Today; Reuters

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