Last week, President Donald Trump grabbed his Sharpie and signed an executive order to tackle the sky-high prescription drug prices in the U.S. The plan? A “Most Favored Nation” (MFN) pricing model that aligns U.S. drug costs with those of other countries.
Sound familiar? Trump tried this during his first term, but the courts rejected it, and Biden hit the ‘undo’ button.
Here’s the lowdown on why Trump is back at it, what’s at stake, and whether this bold move will stick.
The Last Refuge
Trump has promised cheaper drugs since his campaign days, alongside crowd-pleasers like building the wall and draining the swamp. Americans are fed up, paying nearly three times more for medications than people in other wealthy countries.
With the U.S. covering 75% of global pharma profits despite representing only 5% of the world’s population, Trump labels it as “subsidizing socialism abroad” while we get “gouged” at home.
Ouch.
This isn’t a new idea. Trump’s 2020 MFN rule for Medicare Part B drugs was blocked by courts for skipping proper steps and was canceled by Biden in 2021. The 2025 version is larger, covering Medicare, Medicaid, and possibly even private markets.
It tasks the Health and Human Services (HHS), led by Big Pharma skeptic Robert F. Kennedy, Jr., with setting price targets within 30 days. If there is noncompliance, HHS will increase pressure with MFN pricing or “aggressive measures,” a variant of Trump’s FAFO policy.
Additionally, there is discussion about direct-to-consumer drug purchases, increased drug importation, and addressing unscrupulous industry practices.
Why now? Polls indicate that 74% of Americans cannot afford their medications, and Trump faces pressure to reduce inflation and health care costs.
Appointing Kennedy and Dr. Mehmet Oz to lead CMS screams, “we’re taking on Big Pharma!” It also serves as a jab at Biden’s Inflation Reduction Act, which cut prices on 10 drugs but left them 78% higher than abroad.
So, what are the positives, negatives, and potential “oops” of this plan?
The Upside: Cheaper drugs would be a game-changer, especially for seniors and low-income individuals. AARP’s cheering, calling out “rip-off” pricing. Matching global prices addresses the unfairness of Americans financing other countries’ healthcare. Targeting middlemen like pharmacy benefit managers and promoting generics, biosimilars, and imports could shake up the market. Plus, it’s a MAGA crowd-pleaser, boosting Trump’s street cred and GOP prospects in next year’s midterm elections.
The Downside: Pharma giants warn that cutting profits could undermine R&D, slowing the development of new drugs. PhRMA predicts a $1 trillion loss over a decade if Medicaid is included. The order’s unclear legal basis, particularly in private markets, invites lawsuits — 2020 déjà vu. Drugmakers might abandon foreign markets or raise prices abroad, creating trade drama. And setting targets within 30 days? That’s a tall order, though if anyone can hustle, it’s Team Trump.
Oops Moments: If drugmakers focus on profitable markets or halt the production of low-margin drugs, we may face shortages. Europe could see rising medication costs, resulting in trade disputes. Hospitals and physicians might raise other fees to offset losses, indirectly affecting patients’ finances.
Relying on imported drugs raises worries about the supply chain, which heightens national security concerns regarding potential critical drug shortages. If savings do not materialize quickly or if innovation stalls, Congress and voters may withdraw their support, leaving Trump’s plan unviable. It is important to note that Congress has, thus far, failed to codify any of Trump’s executive orders into law.
As lowering prescription drug prices enjoys bipartisan support, it may actually pass Congress. Two Democrats, Ro Khanna and Bernie Sanders, “support voting Trump’s drug price order into law.”
We shall see which members of Congress are serious versus those who follow their Big Pharma paymasters.
The road ahead is bumpy. Big Pharma, via PhRMA, calls MFN a “bad deal” that kills jobs and innovation. They’ve secured court wins and will likely sue again, claiming foul over commercial market meddling. Oddly, stock markets shrugged, suggesting it might not hit hard immediately.
With pharma’s $120 million lobbying power, the largest lobbying group by far, gridlock is likely. Courts may also push back against HHS for overreaching, especially given that tight 30-day timeline. Lawfare has become practically a sport against Trump these days.
Could it work? Perhaps certain aspects, like Medicare Part B or specific drugs, could be effective, but a full rollout in six months seems questionable given all the legal and political complexities. It might just be Trump’s opening bid in an Art of the Deal showdown with drugmakers and Congress.
Let’s see where Democrats stand on Trump’s plan. After all, they are promoting Medicare-for-all legislation with the promise to, “Give the federal government the ability to stand up to drug companies and negotiate fair prices for the American people. Will their hatred of President Trump lead Democrats to abandon one of their long-standing pet projects?
This order represents a bold attempt to address a significant issue. U.S. drug prices are outrageous, and we’re bearing the burden for the world. If it succeeds, it could save vulnerable individuals a substantial amount of money and disrupt global pricing.
However, the risks are significant: reduced innovation, market turmoil, and legal complications could overshadow the benefits. The media refers to it as a populist slam dunk, yet the left argues it’s merely rhetoric without legislation, while some conservatives complain about government interference.
The truth is likely somewhere in the middle—this is a solid idea that might be attempting too much. Still, never bet against Trump pulling off a surprise. Look at what’s happening in the Middle East.
Doing nothing is no longer an option. It led to RFK Jr.’s MAHA movement. As he argues, “We spend two to three times what other countries pay for public health, and we have the worst outcomes, and that’s not acceptable.”
In summary, this is a well-meaning yet challenging play. It could lower costs but encounters significant opposition. Success hinges on smart execution and balancing savings with innovation. Some victories are attainable, but a complete game-changer necessitates larger reforms and Congressional involvement.
Brian C. Joondeph, M.D., is a physician and writer. Follow me on Twitter @retinaldoctor, Substack Dr. Brian’s Substack, Truth Social @BrianJoondeph, LinkedIn @Brian Joondeph, Email brianjoondeph@gmail.com.
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