President Donald Trump has signed a sweeping executive order to slash U.S. prescription drug costs by benchmarking them against the lowest international prices—an aggressive move that has sent shockwaves through the global pharmaceutical market.
At a Glance
- Trump’s executive order ties U.S. drug prices to the cheapest rates abroad
- Strategy inspired by billionaire investor Bill Ackman’s pricing proposal
- The plan could reduce some drug costs by up to 80%
- Pharma stocks tumble worldwide after announcement
- Projected to save trillions in U.S. healthcare costs over time
Price Parity With the World
Announced on May 12, the “Most Favored Nation” executive order aims to realign U.S. prescription drug prices with those paid in other countries. Trump’s policy allows Medicare to negotiate directly with drugmakers using international prices as leverage—a tactic rarely attempted in American policy. The order is expected to cut drug prices by between 30% and 80%, according to LiveMint.
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The plan drew swift praise from billionaire hedge fund manager Bill Ackman, who said Trump “must have liked my idea.” Ackman had previously proposed banning drug companies from charging less abroad than they do in the U.S., thereby forcing a single global price negotiation. As Benzinga reports, Ackman blamed the U.S.’s sky-high drug prices for indirectly subsidizing global pharmaceutical development, calling the practice “a major contributor to our $37 trillion national debt.”
Pharma Panic and Wall Street Fallout
The ripple effects were immediate. Pharmaceutical stocks in Europe, Asia, and India nosedived following the announcement, signaling investor concern over tightened global price margins. This reaction underscores just how reliant many multinational drugmakers have been on the U.S. market for outsized profits.
“For many years the world has wondered why prescription drugs in the United States were so much higher in price than anywhere else,” Trump said in a statement. “There was no rightful answer.” The order attempts to correct what he calls an “embarrassing” and long-standing injustice, according to a White House transcript.
A Fight Over Global Pricing
Ackman has been outspoken about using legislative muscle to end global price disparities. “The best way to reduce drug prices in the U.S. is to make it illegal for drug companies to sell the same drugs abroad for less,” he said, predicting that doing so would create “a globally negotiated price” and stop Americans from “subsidizing the rest of the world.”
Despite legal concerns about international trade implications, Trump’s administration has defended the move as a necessary corrective. Trump emphasized that this executive order builds on prior attempts to empower Medicare and eliminate pharmacy middlemen—steps he says failed to go far enough without congressional action.
Political and Economic Stakes
With the pharmaceutical industry already promising legal challenges, this order sets up a high-stakes clash between populist healthcare reform and global corporate interests. Trump’s allies argue that the policy not only delivers on long-promised price cuts, but may also reconfigure U.S. healthcare economics permanently.
Projected savings, according to internal administration estimates, could total over a trillion dollars in the coming decade. Whether the courts or Congress will let it stand remains uncertain—but the political message is clear: America’s prescription prices are no longer untouchable.
