By Abdul-Karim Ngoliba
- Donald Trump is set to sign an executive order that could lower prescription drugs up to 80%
- Americans spent $98B on prescriptions in 2024, 25% cumulative rise over the past five years
President Donald Trump is pushing for a dramatic shift in the U.S. pharmaceutical market with a new executive order aimed at slashing prescription drug prices by up to 80%. The order invokes a “Most Favored Nation” (MFN) pricing model, compelling drugmakers to match U.S. prices with the lowest rates charged in other comparable developed countries. As the U.S. prescription drug market prepares to hit $1.13 trillion in revenue by 2025, this bold policy could significantly reshape healthcare economics, industry profits, and access to life-saving treatments.
Why This Matters: The U.S. consistently pays more for prescription drugs than other high-income countries. A RAND Corporation study found that U.S. drug prices are, on average, 2.78 times higher than those in 33 other nations, with brand-name drugs averaging 4.22 times higher. In 2024 alone, Americans spent $98 billion out-of-pocket on prescription medications, marking a 25% increase over five years.
Trump’s executive order seeks to address these disparities by tying U.S. drug prices to the lowest prices in comparable countries. Health Secretary Robert F. Kennedy Jr. emphasized that pharmaceutical companies are expected to align their U.S. pricing accordingly, warning that non-compliance would lead to governmental action.
Situational Awareness: While the MFN policy aims to reduce drug prices, experts caution that its implementation may face legal challenges and could potentially impact pharmaceutical innovation. A similar proposal during Trump’s first term encountered legal challenges and was stalled in court. Additionally, critics argue that aligning U.S. drug prices with those of other countries could lead to increased prices abroad and reduced global access to essential medicines. The success of this policy will depend on its execution and the response from pharmaceutical companies and international markets. The implications of this executive order will be closely monitored by stakeholders across the healthcare industry.
CBX Vibe: ‘Alright’ Kendrick Lamar
