Trump’s Executive Order to Lower Drug Costs Has No Clear Enforcement Mechanism
President Donald Trump signed an executive order on Monday asking drugmakers to voluntarily lower pharmaceutical costs for U.S. consumers — but the order lacks a clear mechanism for enacting such reductions.
Trump’s order recognized that costs for prescription medicines are higher in the United States than they are in other countries.
“Drug manufacturers, rather than seeking to equalize evident price discrimination, agree to other countries’ demands for low prices, and simultaneously fight against the ability for public and private payers in the United States to negotiate the best prices for patients,” the order states. “The inflated prices in the United States fuel global innovation while foreign health systems get a free ride.”
To address these discrepancies, the order directs Department of Health and Human Services Secretary Robert F. Kennedy Jr. to “facilitate direct-to-consumer purchasing” and to urge pharmaceutical manufacturers to “sell their products to American patients at the most-favored-nation price” — in short, to give the U.S. the best pricing option among all other countries. If, within 30 days of the order, pharma companies do not comply, the order empowers Kennedy to “propose [a] rulemaking plan to impose” changes in pricing.
But beyond those actions, the order doesn’t have much teeth. The health secretary can “consider” actions after noncompliance from those companies, including importing prescription drugs “on a case-by-case basis” from countries with lower costs. It’s unclear, however, if the administration actually has the legal authority to take those actions unilaterally, and pharmaceutical companies would undoubtedly sue to stall and possibly block the process entirely.
Obtaining “most favored” status also wouldn’t automatically lower prices — in fact, it could just result in price hikes outside the U.S.
Big Pharma stocks reacted positively to the news of Trump’s order, after executives previously feared that it would come with stronger enforcement mechanisms. In a note to investors from Wall Street marketing firm Jefferies, the firm said the outcome was “better than feared” for those investing in pharmaceuticals.
Indeed, in speaking to reporters during the signing ceremony, Trump said that he wasn’t issuing the order as a means to go after Big Pharma.
“I’m not knocking the drug companies. I’m really more knocking the countries than the drug companies. … We’re going to help the drug companies with the other nations,” Trump said.
Trump also suggested that he could use tariffs to compel European countries to pay more for pharmaceutical costs.
“If they want to get cute, then they don’t have to sell cars into the United States anymore,” Trump said. “And we will add it onto the price that we charge them for doing business in America. In other words, we’ll add it on to tariffs.”
Rather than go through a complicated and likely ineffectual method of lowering drug costs through this order, Congress — which is controlled in both houses by Republicans — could pass new legislation empowering the president with greater cost negotiation powers to lower prices.
The justification that doing so would hamper the ability of pharmaceutical companies to “innovate” the production of new medicines is circumspect. Indeed, a study of the effects of such proposed laws from Bentley University in 2024 found that innovation was mainly happening through grants from the National Institutes of Health — and primarily from smaller organizations.
“It’s these little companies where the investment in innovation is happening,” Fred Ledley, the senior author of the study, said last year. “We don’t think they’re going to be adversely affected” by fair pricing laws.
An analysis by the National Academy for State Health Policy, written in 2021 by then-former policy associate Sarah Lanford, came to the same conclusion: that laws empowering the government to lower prices wouldn’t stifle innovation.
“Drug makers claim high prices are necessary to support new drug development and innovation, but research shows that public investment in drug research and development combined with large industry profits leaves manufacturers room to lower prices while continuing to innovate,” Lanford wrote.
In response to Trump’s executive order on Monday, Vermont independent Sen. Bernie Sanders issued a statement agreeing with the need to lower drug costs. But Sanders also noted that Trump issued the order knowing it “will be thrown out by the courts.”
“If Trump is serious about making real change rather than just issuing a press release, he will support legislation I will soon be introducing to make sure we pay no more for prescription drugs than people in other major countries,” Sanders said. “If Republicans and Democrats come together on this legislation, we can get it passed in a few weeks.”