Earlier this week, President Donald Trump signed an executive order that he claims will force Big Pharma to lower prescription drug prices paid by Americans to match the prices paid in other countries. It certainly sounds like a good idea. We pay — by far — the highest prices in the world, for everything from the antipsychotic Abilify to the weight loss drug Zepbound.
But don’t get your hopes up just yet — and not just because the proposal is, in the view of many experts, of dubious legality. The order is framed around the absurd premise that high prices stem from the U.S. subsidizing a bunch of “freeloader” countries around the world. In truth, we pay more because we subsidize corporate monopolies, including Big Pharma and pharmacy benefit managers (PBM), that drive up drug prices at home.
Trump’s order assumes Big Pharma won’t just choose to raise prices charged outside the U.S.
Though Trump’s order criticizes drug manufacturers, it would tolerate continued profiteering and price gouging from Big Pharma. It would leave the biggest PBMs — middlemen whose identities Trump claims not to know, even as his administration is suing them for jacking up insulin prices — unscathed. And it would deflect scrutiny from those PBMs’ parent companies, like UnitedHealth Group, whose bottom lines depend on anticompetitive business models.
Trump is right that drug prices are too high. A January 2024 RAND study found that we pay nearly three times as much for prescriptions as other high-income countries. In 2023, the median annual list price for new brand-name drugs increased 35% to an eye-popping $300,000. So it’s understandable that a July 2023 KFF poll found a majority of Americans are worried about being able to afford their medicines, with 3 in 10 reporting they haven’t taken them as prescribed due to costs. All too often, patients pay with their lives.
Trump is also right that Big Pharma plays a big role in this crisis. Manufacturers game the patent process for brand-name drugs to keep prices high and block more affordable generic and biosimilar options from coming to market. Although they claim these high prices fund research and development of new medicines, their own records show greed also plays a leading role. A 2024 report from consumer advocacy group Public Citizen found the excessive prices paid by Americans for prescription drugs fund “self-enriching activities, including stock buybacks, dividends to shareholders, and executive compensation, that far exceed their investments in innovation.”
There is no way to lower drug costs for American patients without costing Big Pharma, whose executives can afford patio dinners at Mar-a-Lago and hefty donations to Trump’s inauguration fund, and the biggest PBMs, which even Trump admits are “worse than the drug companies. They don’t even make a product, and they make a fortune.”
So Trump’s order — so vaguely worded that it’s not clear if the rules would only apply to federal programs like Medicare and Medicaid or more broadly to commercial plans — ignores the greed inflating American pharmaceutical prices. His order, for example, has just about nothing to say about the role of PBMs. These middlemen negotiate pharmacy benefits on behalf of health plans with drug manufacturers and pharmacies. The “Big Three” — CVS Caremark, Cigna Group’s Express Scripts and UnitedHealth Group’s OptumRx — account for nearly 80% of U.S. prescription drug claims, giving them enormous leverage to demand rebates from drug manufacturers in exchange for coverage.
We can’t export our homegrown drug pricing crisis.
Because rebates are based on list prices, PBMs are incentivized to prefer drugs with higher list prices, even when cheaper generics and biosimilars are available. Indeed, PBM rebates and fees account for 42% of every dollar spent on brand-name drugs in the commercial market, according to a health care research firm Nephron Research. Other high-income countries provide universal health care and directly negotiate drug prices with manufacturers, eliminating the need for PBMs.
So rather than target Big Pharma’s patent abuses or PBMs’ market power, Trump’s executive order would require manufacturers to sell their drugs to American patients at the lowest price available abroad. If manufacturers won’t comply voluntarily with this “most favored-nation” policy, Trump’s order directs Health Secretary Robert F. Kennedy Jr. to propose rules that would tie the drug prices paid in the U.S. to those in other countries. And, yes, those prices are often significantly lower. For instance, a one-month supply of Novo Nordisk’s Ozempic costs $969 in the U.S. compared with $59 in Germany. Sounds great. But Trump’s order assumes Big Pharma won’t just choose to raise prices charged outside the U.S., bringing them more in line with the inflated prices we pay. It also assumes that Trump has the power to do all this — a very big if. Trump issued a similar executive order during his first term, but a federal judge blocked it for procedural reasons. Health policy experts predict Monday’s order will run into similar legal challenges, and the markets seem to think so as well, with drug manufacturer shares surging more than 6% in some cases following the announcement. Even if Trump’s order were to take effect, however, it would do nothing to address the root causes of the problem it purports to solve. That would require prohibiting the pharmaceutical industry’s patent abuse and pursuing enforcement action against those that have violated antitrust laws. It would mean banning PBMs from accepting rebates. Finally, it would mean taking on the PBMs’ parent companies — that is, the giant health insurance conglomerates that own them, which similarly gouge patients and taxpayers for medical services — by breaking them up. Anything less than those structural reforms is unlikely to bring about significant change. “Until policymakers address the growing gap between inflated list prices of medicines and the actual costs of those medicines, we should expect the same system[ic] dysfunction that exists today to only fester and worsen in the future,” says Antonio Ciaccia, CEO of the nonprofit drug price research firm 46brooklyn. In other words, we can’t export our homegrown drug pricing crisis. It’s something we have to fix ourselves.
Emma Freer
Emma Freer is a senior policy analyst for health care at the American Economic Liberties Project, a nonpartisan advocacy group that opposes the concentration of economic power. 
