Trump’s order on US drug prices: What’s in it, and will it work?
US President Donald Trump has signed an executive order that aims to reduce high prescription drug prices – but its details and long-term effects are far from clear.
Citing figures that patients in other countries pay much less than Americans for pharmaceuticals, Trump said he would order drug companies to reduce their prices inside the US.
He touted the move as “one of the most consequential” executive orders in US history, claiming prices would fall “almost immediately, by 30% to 80%”.
But experts are highly sceptical of the claims, and stock market moves indicate that investors think they will have little immediate effect.The US has a particularly complex healthcare system – including a large private insurance industry, employer subsidies, and publicly funded insurance programmes for the elderly and poor, known as Medicare and Medicaid respectively.
In many other developed countries, more centralised systems mean that officials can negotiate blanket rates for drugs, and in some cases refuse to buy if they deem the price too high.
In 2021, the US Government Accounting Office made a comparison with Australia, Canada and France, and found that prescription drugs were on average two to four times more expensive in the US.
Politicians from both US political parties have taken aim at the costs. During Monday’s White House announcement, Health Secretary Robert F Kennedy Jr noted that prices had been a preoccupation of Democrats and a main target in socialist Senator Bernie Sanders’ presidential campaigns.
Both Trump in his first term and former President Joe Biden tried to tackle the issue, particularly the cost of life-saving drugs such as insulin, but US prices remain stubbornly high.
Speaking at the White House on Monday, Trump and his health officials blamed the lack of progress on pharmaceutical lobbying efforts and large donations to members of Congress.
“The drug lobby is the strongest lobby,” Trump told reporters. “But starting today, the United States will no longer subsidise the health care of foreign countries, which is what we were doing.”
It should also be noted that Trump’s trade tariffs – which he has consistently used to threaten other countries – could increase costs even further. Trump has previously said he will tax drugs imported into the US.
