President Donald Trump is poised to slash U.S. drug prices by up to 80% through a bold Executive Order linking American costs to the lowest international prices.
At a Glance
- Trump plans to sign an Executive Order on May 12 implementing a “Most Favored Nation’s Policy” for prescription medications
- The policy aims to reduce U.S. drug prices by 30-80% by matching the lowest prices available internationally
- Billionaire investor Bill Ackman praised the plan, which mirrors his earlier proposal to stop Americans from subsidizing global drug costs
- Pharmaceutical stocks dropped globally following Trump’s announcement
- The initiative addresses the $37 trillion national debt while targeting unfair pricing practices
Trump’s Prescription for Drug Price Relief
President Donald Trump announced plans to sign an Executive Order on May 12 aimed at dramatically reducing prescription drug prices for Americans. The order will implement a “Most Favored Nation’s Policy” that prevents pharmaceutical companies from charging U.S. consumers more than they charge in other economically advanced countries. This approach could cut drug prices by 30-80% according to Trump’s estimates, potentially saving American consumers and healthcare systems trillions of dollars over time.
The policy targets a longstanding disparity where Americans pay substantially more for medications than patients in other countries, despite drugs often being manufactured in the same facilities by the same companies. Trump’s Executive Order seeks to end what many conservatives view as foreign countries taking advantage of American consumers and taxpayers through unbalanced trade practices in the pharmaceutical sector.
Ackman’s Influence on Trump’s Drug Pricing Policy
Billionaire investor Bill Ackman, CEO of Pershing Square, has emerged as a key supporter of Trump’s drug pricing initiative. Ackman had previously proposed making it illegal for pharmaceutical companies to sell drugs abroad at lower prices than in the United States. Following Trump’s announcement, Ackman took to social media to praise the President’s approach, suggesting Trump had adopted his recommendation.
“President Donald Trump must have liked my idea,” Ackman stated, adding that Trump would be the “first President in history to rectify the situation” where American consumers subsidize drug development for the rest of the world.
Ackman has been vocal about how current pharmaceutical pricing practices contribute to America’s growing national debt, which has reached $37 trillion. His proposed solution, now apparently embraced by Trump, would force pharmaceutical companies to negotiate prices globally, resulting in Americans paying less and foreign consumers potentially paying more to fairly distribute drug development costs.
Market Reaction and Economic Impact
Trump’s announcement sent immediate shockwaves through global pharmaceutical markets. Pharmaceutical stocks experienced significant declines across Europe, Asia, and India as investors processed the potential impact on industry profits. The SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF also registered slight declines following the news, though futures for major indices remained resilient ahead of market openings.
“The best way to reduce drug prices in the US is to make it illegal for drug companies to sell the same drugs abroad for lower prices than they sell them for here. This will force a globally negotiated price that will be lower than the prices that US consumers pay now and higher than what foreigners pay now. Otherwise we are stuck with a system where American consumers subsidize drug development for the rest of the world. Ask any pharma company CEO. They will agree that the above approach will have the intended effect,” wrote Ackman.
While pharmaceutical industry representatives have expressed concerns about how the policy might affect research and development funding, proponents argue that a more equitable global pricing structure will maintain innovation while relieving the disproportionate burden currently placed on American patients. The plan could potentially save the U.S. healthcare system substantial amounts while addressing a key contributor to the national debt crisis.
A New Approach to an Old Problem
Trump’s Executive Order represents a departure from traditional approaches to drug pricing in the United States. Rather than implementing direct price controls or allowing Medicare to negotiate prices—policies often favored by Democrats—Trump’s approach leverages America’s market power to demand equitable treatment in global markets. This market-oriented solution aligns with conservative principles while addressing a problem that has frustrated American consumers for decades.
The Executive Order, if implemented as described, could represent one of the most significant reforms to pharmaceutical pricing in American history. By addressing the imbalance in global drug pricing, Trump’s plan aims to provide immediate relief to American consumers while establishing a more sustainable model for drug pricing that doesn’t unfairly burden U.S. citizens with the costs of global pharmaceutical innovation.
