America To Be The "Most Favored Nation"?
President Trump Puts Onus On Other Countries For Unequal Drug Prices
Give President Trump credit: he does not hesitate to swing for the cheap seats. Last night’s Truth Social post promising major reductions in drug prices is no exception.
Update 4:00PM CDT 12 May 2025
One interesting aspect of President Trump’s Executive Order on drug prices is the rationale he employs to justify it: other nations have coerced Big Pharma to charge less for various medications, leaving Americans to pay proportionately more.
In his press briefing this morning, President Trump framed the issue in stark terms:
Our country has the highest drug prices anywhere in the world by sometimes a factor of five, six, seven, eight times. It's not like they're slightly higher, that six, seven, eight times. There are even cases of 10 times higher. So that you go 10 times more expensive for the same drug, that's big numbers.
Even though the United States is home to only 4% of the world's population, pharmaceutical companies make more than two-thirds of their profits in America. So think of that. With 4% of the population, the pharmaceutical companies make most of their money, most of their profits from America. That's not a good thing.
Just as interesting was his willingness to give the major drug companies political cover, putting all the blame on foreign governments and completely whitewashing the role Big Pharma plays in drug pricing worldwide.
Certainly there is substance to the question of price imbalance. The extreme imbalances in drug prices here in the United States vs drug prices overseas is an acknowledged reality by at least one All Facts Matter reader.
Is an Executive Order the right response? That is a good question with no good answer.
On the one hand, we have the Constitution, which specifies in Article 1 Section 8 that the Congress is to oversee commerce with foreign nations.
On the other hand, we have the reality that Congress as well as prior Presidential Administrations have allowed such pricing imbalances to emerge.
We also have the reality that Congress has delegated many of its powers and prerogatives, and seems reluctant to take any of it back.
Is Trump’s approach the best way to rectify such an imbalance? Not only do I not know, I’ll hazard a guess that nobody knows. Much like with Trump’s Liberation Day tariffs, the ultimate outcomes are not knowable at this time.
Still, if the Trump administration can achieve even just a 1/3 deduction in the differential between domestic and foreign pricing, that would be beneficial to a great many Americans.
What do you think? Leave a comment below or in the chat discussion thread on the topic?
Let me know your thoughts!
Update 10:45AM CDT 12 May 2025
President Trump’s Executive Order has been signed. It calls for pricing by decree.
Sec. 5. Establishing Most-Favored-Nation Pricing. (a) Within 30 days of the date of this 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.
Lower prices are always better than higher prices. However, when the HHS Secretary is tasked with setting “price targets” for prescription drugs, that is not a market mechanism at work, but is the sign of a command economy.
This approach would be just as antithetical to the operation of free and unfettered markets if it were Congress doing this via legislation instead of by Executive Order.
What this does highlight is the degree of market power the major pharmaceutical companies possess—and which is also antithetical to the operation of a free and unfettered market. Therein lies the core of this nation’s problems with healthcare costs: Big Pharma constitutes an oligopoly and imposes barriers to competition within the pharmaceutical industry.
The entire healthcare system is typified by this sort of anti-competitive market structure, where oligopoly, monopoly, and corrupting market power are the order of the day.
President Trump would be doing a far greater service to the country if he directed the Department of Justice’ Antitrust Division to commence antitrust actions against Big Pharma for price fixing. The arguments he lays out in his EO for setting price targets are a case that Big Pharma fixes prices.
Starting Point
U.S. President Donald Trump said on Sunday he would sign an executive order that he said would reduce prescription drug and pharmaceutical prices by between 30% and 80%.
The full post on Truth Social also outlined the apparent trade imbalance regarding the cost of prescription drugs in this country.
This is actually Donald Trump’s second Executive Order targeting prescription medications. The first was signed on April 15 and directed the Secretary of Health and Human Services to leverage the Medicare Drug Price Negotiation Program in order to achieve a 22% reduction in drug prices.
Exactly what Trump will do differently in tomorrow’s Executive Order is unclear, but there is no mistaking the objective—up to 80% price reductions in prescription medications.
One intriguing facet of the April 15th EO: it directs the HHS Secretary to “work with Congress” for a number of the stated objectives (emphasis mine).
The Secretary shall work with the Congress to modify the Medicare Drug Price Negotiation Program to align the treatment of small molecule prescription drugs with that of biological products, ending the distortion that undermines relative investment in small molecule prescription drugs, coupled with other reforms to prevent any increase in overall costs to Medicare and its beneficiaries.
Whether the April 15th EO or tomorrow’s offers up achievable objectives is very much an open question.
What is less open to question is how President Trump is coming to view Congress: there to legislate his agenda. While the EO is notionally an instruction for the HHS Secretary, as a practical matter it can only be carried out if the Congress is also fully compliant with the EO directives.
I do not know what the details will be in tomorrow’s Executive Order will be, but I will be somewhat surprised if that order does not also instruct both HHS Secretary Robert F. Kennedy, Jr., and the Congress both on what they respectively will be expected to accomplish on drug costs.
On the one hand, realigning the pharmaceutical industry’s cost picture would almost certainly save consumers money.
On the other hand, a President literally instructing Congress on legislation via Executive Order is undeniably pushing the envelope on what an Executive Order should accomplish. Given that Congress is responsible per Article I of the Constitution for enacting laws, and the President is responsible per Article II of the Constitution for enforcing them, at a minimum Trump is adopting an aggressive view of the Constitutionally-defined dynamic between the Legislative and Executive Branches of Congress.
Potentially, his is an authoritarian view. Intentionally or otherwise, any drift towards an “Imperial Presidency” mode of governance is going to have authoritarian overtones.
Yet Congress has the means to push back against such Executive Orders—they can pass legislation. Congress could, if it wished, pass resolutions mitigating or even rescinding any one of Trump’s Executive Orders. Congress could have pre-empted Donald Trump’s Executive Orders on prescription drugs by forging ahead with its own set of instructions on drug price negotiation for the President through his HHS Secretary.
President Trump’s wielding of a sort of “proxy legislation” power by virtue of his Executive Orders is a disturbing reminder of how feckless and supine Congress has become.
What will that mean for prescription drug prices? We will find that out in greater detail tomorrow morning at 9AM.
> President Trump would be doing a far greater service to the country
> if he directed the Department of Justice’ Antitrust Division to commence
> antitrust actions against Big Pharma for price fixing.
Not just Big Pharma, but the entire "health care" industry. It's all a giant cartel.
That said, it's wrong to allow American companies to sell products overseas for a fraction of the price they charge us here. The high prices we pay here are subsidizing the rest of the world.
If the "price targets" are set to the level that Pharma charges in other countries, I'm not opposed. If Pharma is willing to sell the stuff over there for those prices, why not here?
Oh, there's no profit, or no return on the R&D investment at those overseas prices? Fine, then raise them over there and we'll adjust our "targets" to match. Yes, Pharma needs to make a profit and recoup their R&D costs, but it doesn't need to be just Americans who bear that burden.
BTW, I have no real dog in this fight. I'm one of the very few people in their mid 60s who takes no prescription drugs. But I could tell you an interesting story about drug pricing for the one that my wife is on. Let me know if you want to hear it.
This tactic may be twofold. One, Trump may achieve a reduction in costs to consumers, which would be a great help to Republicans during the midterm elections. Two, Trump’s move forces out into the open which members of Congress are thoroughly intertwined with Big Pharma, controlled so much that they will end up looking like mere puppets of the medical-pharmaceutical industry - which would be a great help to Trump’s side during the midterm elections. “Art of the Deal” indeed!