On Sunday, U.S. President Donald Trump revealed plans to sign an executive order that seeks to lower prescription drug prices by aligning them with what other high-income nations pay. Trump outlined that the prices in the U.S. could drop by as much as 30% to 80%, in line with the costs paid by other developed countries.

In a statement posted on Truth Social, Trump confirmed his intention to sign the executive order on Monday morning, marking a significant move towards what is commonly known as “most favored nation” pricing or international reference pricing. The concept behind this policy is simple: the U.S. would no longer pay higher prices than other developed countries for prescription drugs.

U.S. Drug Prices Far Outpace Global Standards

The U.S. is known to have some of the highest prescription drug prices in the world, often paying up to three times more than other developed nations for the same medications. Trump has long stated his desire to reduce this disparity, although he has not yet outlined specific methods in his posts. He mentioned that the new policy would equalize drug prices worldwide, asserting that “prices will rise throughout the world in order to equalize and, for the first time in many years, bring fairness to America.”

The proposal marks a direct effort to close the significant gap between U.S. drug prices and those of other countries, which consistently pay much lower rates for the same medications.

“Most Favored Nation” Pricing

Trump’s plan involves the implementation of a “Most Favored Nation” policy, whereby the U.S. will pay no more for drugs than the country with the lowest prices globally. This new pricing strategy is aimed at significantly lowering the cost of prescription drugs for American consumers, but will also have international consequences as it could lead to price adjustments in other countries.

Anticipated Focus on Medicare

According to four drug industry lobbyists briefed by the White House, the focus of the executive order will likely be on the Medicare health insurance program. Medicare is the U.S. government’s primary health program for individuals aged 65 and older, and the new policy could significantly impact drug prices for millions of Americans.

The anticipated order would extend beyond the scope of the Inflation Reduction Act, signed by former President Joe Biden, which allows Medicare to negotiate prices for a set list of drugs. Under the Biden administration’s law, Medicare has already negotiated prices for 10 drugs, with more set to be negotiated in the coming months. Trump’s executive order, however, would cover a broader range of medications, which could lead to further price reductions.

Pharmaceutical Industry Pushback

The pharmaceutical industry has expressed concerns over the plan. Alex Schriver, a spokesperson for the Pharmaceutical Research and Manufacturers of America, the leading U.S. drug industry lobby group, criticized the idea, stating, “Government price setting in any form is bad for American patients.” The organization has long argued that such policies could undermine the research and development of new drugs, which could ultimately harm patients in the long run.

Previous Efforts to Tackle Drug Pricing

This is not the first time President Trump has tried to address the issue of high drug prices by tying U.S. pricing to those of other nations. During his first term, he proposed a similar policy called international reference pricing. However, a court blocked the initiative, preventing it from taking effect.

The previous attempt, introduced five years ago, was projected by the Trump administration to save American taxpayers over $85 billion over seven years. It was expected to reduce U.S. annual drug spending, which exceeds $400 billion. Despite the setbacks, Trump has remained committed to addressing high drug prices, and his new executive order signals a renewed effort to reduce costs for American consumers.

As the executive order moves forward, the pharmaceutical industry is likely to continue lobbying against the proposal, while advocates for lower drug prices are expected to celebrate the shift towards more equitable pricing practices on a global scale.