Trump’s Drug Price Slash: Will You Pay 80% Less for Meds?
How Trump’s May 2025 executive order could cut U.S. drug costs with Most Favored Nation pricing—and its impact on patients, R&D, and your budget.
We all know, or should know, that Americans pay wildly higher prices for prescription drugs than in many other countries. Last week, President Donald Trump signed an Executive Order on May 12, 2025, seeking to slash U.S. drug prices by 30%—80% via Most Favored Nation (MFN) pricing. This is basically taking Bernie Sanders' ideas and enacting them in a different way. Trump’s executive order and Sanders’ proposals share a goal of fairness in drug pricing with other countries.
Sanders’ proposals and Trump’s differ with respect to method, though. Trump seeks in his EO to essentially eliminate the middlemen (Pharmacy Benefit Managers).
So, what is MFN, or Most Favored Nation pricing? In this case, American customers would not pay more for prescriptions than the lowest price charged in other developed nations like Germany or Canada for any particular drug. This EO would force drug manufacturers to lower U.S. domestic prices (price controls). Trump has now directed all federal agencies to establish direct-to-consumer purchasing programs, bypassing the PBMs.
If this works as Trump’s announcement contends, it would save taxpayers and patients billions annually, while also making chronic conditions for Americans more affordable. It remains to be seen if it will increase competition as this extra layer of bureaucracy is lessened. It is speculated that it could negatively impact research and development for new and improved drugs, or at least as it is done in the United States. Could this move cause more R&D to leave America for other countries, as companies seek better profits after getting hit with the effects of this EO? Time will tell.
A National Bureau of Economic Research (NBER) study suggests that international reference pricing (IRP), similar to MFN, could reduce U.S. drug profits by 20-27.5% (NBER: IRP Study). This could discourage R&D investment, a concern for Viera residents hoping for advanced treatments to support a healthy, vibrant life. After all, clinical trials in the U.S. have grown dramatically over the last twenty years.
