US President Donald Trump has signed an executive order aimed at reducing high prescription drug prices, but the details and long-term effects of the move are far from clear. Citing figures that patients in other countries pay much less than Americans for pharmaceuticals, Trump claimed prices would fall "almost immediately, by 30% to 80%." However, experts are highly sceptical of the claims, and stock market moves indicate that investors think the order will have little immediate effect.
The US has a particularly complex healthcare system, including a large private insurance industry, employer subsidies, and publicly funded insurance programs for the elderly and poor, known as Medicare and Medicaid. In contrast, more centralized systems in other developed countries allow officials to negotiate blanket rates for drugs and, in some cases, refuse to buy if they deem the price too high. In 2021, the US Government Accounting Office made a comparison with Australia, Canada, and France, and found that prescription drugs were on average two to four times more expensive in the US.
Politicians from both US political parties have taken aim at the costs. During Monday's White House announcement, Health Secretary Robert F. Kennedy Jr. noted that prices had been a preoccupation of Democrats and a main target in socialist Senator Bernie Sanders' presidential campaigns. Both Trump in his first term and former President Joe Biden tried to tackle the issue, particularly the cost of life-saving drugs such as insulin, but US prices remain stubbornly high.
Speaking at the White House on Monday, Trump and his health officials blamed the lack of progress on pharmaceutical lobbying efforts and large donations to members of Congress. "The drug lobby is the strongest lobby," Trump told reporters. "But starting today, the United States will no longer subsidise the health care of foreign countries, which is what we were doing."
Trump's order is much wider than previous efforts to bring down costs, but many details are yet to be worked out. The wording directs US officials to make sure that deals over drug costs made by foreign countries do not result in "unreasonable or discriminatory" price hikes for Americans. However, what exactly is covered by those terms is unclear – as is the question of what measures the White House would take if "unreasonable" practices are discovered.
The White House also wants drug companies to sell more products directly to consumers – cutting out insurance companies and pharmaceutical benefit managers – and look into importing drugs from foreign countries where they are sold at lower prices. That idea has previously hit stumbling blocks over safety and trade rules. An official said that Monday's order was the start of negotiations between the US Department of Health and Human Services (HHS) and industry.