President Donald Trump signed an executive order aimed at reducing prescription drug prices in the United States.
The executive order seeks to cap prices at levels similar to those in other developed nations.
Driving the news: A study conducted by the Rand Corporation in 2024 revealed that Americans pay 278 times more for prescription drugs compared to 33 other nations.
The big picture: The executive order introduces a “most favored nation policy” to align U.S. prices with the lowest prices worldwide.
- This policy directive aims to equalize prices for prescription drugs across nations.
- The Department of Commerce and the U.S. Trade Representative are tasked with addressing unfair practices that suppress drug prices globally.
- Health and Human Services Secretary Robert F. Kennedy Jr. is directed to establish clear targets for reducing prescription drug and pharmaceutical prices within 30 days.
- The order is expected to initiate negotiations between government agencies and drug industries to lower costs.
Go deeper: If negotiations are unsuccessful, a pricing model will be imposed, setting U.S. prices at the lowest rates paid by similar countries.
- The FDA may expand drug importation beyond Canada to access lower-priced medications, and the Department of Justice and the Federal Trade Commission will crack down on anti-competitive actions that contribute to high drug prices.
- White House officials mentioned a potential drug price reduction of up to 90% under the executive order.
