Trump Targets Drug Prices With New Executive Order Tied to Global Rates

U.S. President Donald Trump is expected to sign a new executive order as early as next week to lower prescription drug prices by linking Medicare payments to lower international rates, according to a Politico report. The move revives the "most favored nation" pricing model, which would align U.S. drug costs with those paid in other developed countries.

This plan is part of Trump’s ongoing effort to cut soaring drug costs in the U.S., where prices are often nearly triple those in comparable nations. Trump stated this week that Americans are being “ripped off” and promised a major announcement related to drug pricing reforms. The White House aims to curb spending on high-cost medications under Medicare, the federal program that covers over 60 million Americans.

The executive order is expected to instruct federal agencies to initiate a pilot program, reviving a previously blocked policy from Trump’s first term. That proposal, halted by a court ruling, was projected to save U.S. taxpayers over $85 billion across seven years.

The pharmaceutical industry is bracing for pushback. One drug company executive labeled the policy an "existential threat" to innovation in the U.S. biosciences sector. Following the report, shares of top drugmakers dropped in after-hours trading—Eli Lilly fell over 3%, while Merck, Gilead Sciences, and Bristol Myers Squibb saw losses of around 2%.

This comes as President Joe Biden’s Inflation Reduction Act also pushes drug pricing reform through direct Medicare negotiations. Still, prices for key medications remain more than double—sometimes five times—the rates seen in other high-income countries.

If enacted, Trump's pricing policy could significantly reshape the pharmaceutical landscape and Medicare spending structure in the U.S.