Trump promises to slash US drug prices by up to 80% with executive order
12 May 2025, 12:48
President Trump has promised to sign an executive order on Monday, which aims to compel drug companies to slash their prescription prices by up to 80%.
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Trump announced Monday’s executive order on Sunday, claiming it will slash prescription drug prices “almost immediately” from 30% to 80%.
Posting on Truth Social, Trump described the move as “one of the most consequential executive orders in our country’s history”.
There are no specifics on how the policy will be implemented as of yet, but Trump has claimed this policy will save the US “trillions” of dollars.
New prices will reportedly be set against prices paid by other countries. In a move dubbed the “most favoured nations” policy, the US will purchase drugs at the lowest international rate.
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The directive comes as Trump hopes to impose new tariffs on pharmaceutical imports. Drugs have previously been exempted from levies - but new tariffs could cause shortages and price raises.
Shares in European and Asian drug makers have fallen since the announcement, as the market prepares for a potential hit to the pharmaceutical industry.
Trump’s “most favoured nations” model had been a cornerstone of his first term, but had been put on the backburner for this term.
As part of the model, the President had tried to enact similar policies in 2018 and 2020, but received pushback from the pharmaceutical industry and federal courts.
Medicare, the US’ federal healthcare insurance system for anyone over 65, had previously been barred from negotiating drug prices.
But the Biden administration changed this in 2022 with the Inflation Reduction Act, which allowed the federal government to barter on the price of 10 specific drugs.
The Biden administration declined to pursue Trump’s policy of lowering prescription prices en masse, however.
The pharmaceutical sector has long been opposed to these policies, claiming the reduction in research spending could inhibit innovation.
The news comes amid the announcement that Medicaid, a federal health insurance system for low-income citizens, would be subject to sweeping cuts and regulations.
New legislation introduced by House Republicans would cut Medicaid spending significantly, and impose new restrictions on beneficiaries.
The move comprises a part of the "Trump tax bill" - a series of sweeping cuts to federal spending.