Cutting the Tab: Trump Moves to Link U.S. Drug Prices to Lowest in the World

What Happened

This past weekend, President Trump announced plans to sign a sweeping executive order aimed at slashing prescription drug prices across the United States. The move revives a controversial pricing strategy from his first term known as the 'most favored nation' (MFN). This policy links U.S. drug prices to the lowest prices paid by other wealthy countries like Germany, Canada, and the U.K.

The policy bypasses Congress. It directs federal agencies to align what Medicare pays for prescription drugs with the lowest global price among a set of comparable nations. Trump’s team claims this could cut costs on certain drugs by 30% to 80%.

Unlike the more limited Medicare negotiations under President Biden’s Inflation Reduction Act which only targeted ten high-cost drugs, the MFN rule aims to cast a wider net. It could potentially cover dozens more medications. Though the original version was blocked in court in 2020, Trump is betting on a refined legal approach and renewed public demand to push it through this time.

Why It Matters

Americans pay the highest prescription drug prices in the world. That’s often two to three times more than what patients in Europe or Canada pay for the same medications. This gap has fueled public outrage and calls for reform from both parties, especially as out-of-pocket costs have spiked.

The MFN pricing strategy is radical by U.S. standards. It essentially tells pharmaceutical companies to charge individuals what they charge everyone else or lose Medicare as a buyer. For expensive drugs used to treat cancer, autoimmune diseases, and rare conditions, this could mean massive savings for the government and consumers alike.

However, pushback is strong. Drug companies argue that forced price cuts will slash profits, stifle innovation, and result in fewer new drugs hitting the market. They also warn that manufacturers could raise prices overseas or even restrict supplies in the U.S.

There’s also a legal risk. Courts stopped the original MFN rule before it took effect in 2020, citing a lack of transparency and concerns over executive overreach. Trump’s team says the new version has been legally fortified, but legal battles are all but guaranteed.

How It Affects You

For individuals relying on Medicare for their prescriptions, this executive order could directly lower the prices you pay, especially if you're using expensive, name-brand drugs. Some estimates suggest that Medicare beneficiaries could save hundreds or even thousands of dollars a year if the rule sticks.

The policy could also pressure private insurers and pharmacy benefit managers to follow suit. Should that happen, it would shift the entire market toward global price parity, benefiting people under employer or marketplace plans too.

However, access issues are a real concern. Drugmakers may respond by limiting the availability of certain drugs or withdraw from markets where prices are driven down. That means you could see delays in accessing new therapies. In rare cases, you could find that a drug you rely on is harder to get.

For now, the order’s fate depends on how it’s written and whether it survives legal scrutiny. If everything goes according to plan, the U.S. might finally stop overpaying for drugs. If it doesn’t, the battle over pricing reform will only intensify.