In announcing this Executive Order, the President pointed out our government has for too long turned its back on American taxpayers and prescription drug purchasers, who unwittingly sponsor both drug manufacturers and other countries.
Said President Trump, “In case after case, our citizens pay massively higher prices than other nations pay for the same exact pill, from the same factory, effectively subsidizing socialism abroad with skyrocketing prices at home. So, we would spend tremendous amounts of money in order to provide inexpensive drugs to another country. And when I say the price is different, you can see some examples where the price is beyond anything — four times, five times different.”
These entities today rely on price markups on American consumers, generous public subsidies for research and development primarily through the National Institutes of Health, and robust public financing of prescription drug consumption through Federal and State healthcare programs.
According to recent data, the prices Americans pay for brand-name drugs are more than three times the price other OECD nations pay, even after accounting for discounts manufacturers provide in the U.S.
The United States has less than five percent of the world’s population, yet funds roughly 75% of global pharmaceutical profits.
Drug manufacturers discount their products to gain access to foreign markets and then subsidize those discounts through high prices charged in America—in essence, Americans are subsidizing drug-manufacturer profits and foreign health systems, despite drug manufacturers benefiting from generous research subsidies and enormous healthcare spending by the U.S. Government.
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 inflated prices in the United States fuel global innovation while foreign health systems get a free ride.
This abuse of Americans' generosity, who deserve low-cost pharmaceuticals on the same terms as other developed nations, must end, President Trump’s statement said. Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories. As the largest purchaser of pharmaceuticals, Americans should get the best deal.
To that end the President said, “My Administration will take immediate steps to end global freeloading and, should drug manufacturers fail to offer American consumers the most-favored-nation lowest price, my Administration will take additional aggressive action.”
The President first directed the Secretary of Commerce and the US Trade Representative to take all necessary and appropriate action to ensure foreign countries are not engaged in any act, policy, or practice that may be unreasonable or discriminatory or that may impair United States national security and that has the effect of forcing American patients to pay for a disproportionate amount of global pharmaceutical research and development, including by suppressing the price of pharmaceutical products below fair market value in foreign countries.
The second step the President announced – and this is huge – was, to the extent consistent with law, direct the Secretary of Health and Human Services to facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.
Next, the President directed that within 30 days of the date of the order, the Secretary shall, in coordination with the Assistant to the President for Domestic Policy, the Administrator for the Centers for Medicare and Medicaid Services, and other relevant executive department and agency (agency) officials, communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.
If the pharmaceutical companies do not comply, then the officials charged with communicating the most-favored-nation price targets” are directed to begin the rulemaking process to force the companies into compliance.
In his first term, President Trump took historic action to keep Medicare and seniors from paying more for drugs than economically comparable countries, which the Biden Administration rescinded before it could take effect.
Instead of fixing this problem, the Biden Administration’s greatest achievement was to negotiate prices that were, on average, 78 percent higher than in 11 comparable countries as part of Biden’s effort to “beat Medicare.”
The clock is now ticking on a long-overdue change in federal policy that will end the American taxpayer and consumer subsidy of foreign prescription drug patients. We look forward to when the clock strikes midnight on June 11 and prescription drug prices fall for America’s hard-pressed taxpayers and prescription drug consumers.
- Trump Executive Order
- Drug prices
- Trump tariffs
- Drug companies
- Most Favored Nation
- Drug manufacturers
- Foreign drug prices
- federal subsidies
- Big Pharma
- Price fixing
- Direct to Consumer sales
- DHS
- Biden administration
- Price negotiations
