Trump Issues Executive Order Aimed at Lowering Drug Prices

On Monday, May 12, President Donald Trump signed an executive order laying out a plan to lower prescription drug prices in the U.S. to levels paid by other developed countries. The order calls on drug manufacturers to voluntarily reduce prices by aligning them with the lowest price available in other developed nations, a concept referred to as “most-favored-nation” pricing.

The order directs the U.S. trade representative and the Department of Commerce to ensure foreign countries are not engaged in practices that intentionally weaken market prices and increase prices in the U.S. It also directs the Department of Health and Human Services to facilitate “direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.” If implemented, this would mean Medicare and Medicaid programs could pay no more than the lowest price charged for the same drugs in other developed countries.

Within 30 days of the order, the administration plans to provide price targets to drug manufacturers to bring prices on American drugs in line with comparably developed nations. If drug manufacturers do not comply with these target prices, the order directs the Department of Health and Human Services to propose rules that impose most-favored-nation pricing and authorizes further action if needed.

A government report found that in 2022, U.S. prices across all drugs were nearly three times higher than prices in other Organization for Economic Co-operation and Development (OECD) countries, with prices for brand-name drugs nearly 3.22 times higher than prices in other OECD countries.

It is unclear whether drug manufacturers will voluntarily comply with the administration’s price targets and how much drug prices will actually decrease for consumers. While most-favored-nation pricing could lead to significant savings for programs like Medicare, it is likely to face legal challenges from the pharmaceutical industry.

In Arkansas, the rising cost of prescription drugs continues to be a concern. State lawmakers recently passed a first-of-its-kind law, Act 624 of 2025, which prohibits pharmacy benefits managers (PBMs) from owning or operating pharmacies. PBMs negotiate fees and rebates with drug manufacturers, create approved drug lists for health insurers, and pay pharmacies for patients’ prescription drugs. Supporters of the law say it will address anticompetitive business practices of PBMs and improve patient access to lower-cost drugs. However, the law has also drawn criticism from PBM affiliates who say it will reduce access to pharmacy services. CVS Health (which operates its own PBM, CVS Caremark) has said the new law will result in the closure of its 23 pharmacy locations in Arkansas.