Same drugs, same prices? Trump will mandate that U.S. drug prices match those of the lowest-priced countries, stating that "U.S. drug prices could drop by 30% to 80%."

Trump takes action against the pharmaceutical industry again, announcing that drug prices will align with the lowest prices globally.

On Sunday evening local time, Trump stated on social media that he plans to sign a significant executive order on Monday, mandating that U.S. prescription drugs be paid at the same prices as those in countries with the lowest prices globally, with expectations that prescription drug and medication prices will almost immediately drop by 30% to 80%, while global drug prices will rise to achieve balance, bringing fairness to the U.S. for the first time in years.

Currently, the specific details of the executive order have not been disclosed, including whether the policy applies only to government programs, whether it is limited to specific categories of drugs, and key issues regarding the specific implementation mechanism.

Following the announcement, the Japanese pharmaceutical index fell 3.9% on Monday, becoming the largest declining industry index among the sub-indices on the Tokyo Stock Exchange.

The existing drug pricing system will be overturned

Trump believes that this policy will “unprecedentedly” lower healthcare costs in the U.S.

For a long time, pharmaceutical companies have insisted that high drug prices are a necessary condition for driving innovation and developing new therapies, and reforming this system would significantly cut revenues and stifle the development of breakthrough therapies that could extend and improve lives.

In response, Trump countered that this means “Americans are being taken advantage of by paying these high prices for no reason”, and he also predicted that to “balance and bring fairness to the U.S. for the first time,” global drug prices might rise, which could have far-reaching effects on the international pharmaceutical market.

Trump has long targeted U.S. drug prices

It is worth noting that this is not Trump's first attempt to reform U.S. drug prices.

During his first term, Trump proposed a Medicare pilot program targeting drugs used in doctors' offices that lack low-cost generic competition, aiming to align prices with those in countries like France and Japan.

The plan was supposed to be implemented in phases over three years, ensuring that prices paid by Medicare would not exceed the lowest prices offered by 22 countries. However, the plan was overturned in federal court after pharmaceutical companies challenged that the government did not properly execute the rule-making process.

The Biden administration did not appeal this ruling but instead pushed for legislation, ultimately leading to the passage of the Inflation Reduction Act.

In 2022, under the Biden administration's push, the Inflation Reduction Act authorized the federal government to negotiate prices for the highest-cost drugs within the Medicare program and planned to increase the number of negotiated drugs each year. The first two rounds of price negotiations did not include physician-prescribed drugs, but the next round may include them.

Is Ackman the source of inspiration?

Billionaire hedge fund manager Bill Ackman hinted that Trump's move may have been inspired by him.

In March of this year, Ackman tweeted on platform X:

“The best way to lower drug prices in the U.S. is to legislate a ban on pharmaceutical companies selling the same drugs abroad at prices lower than those in the U.S.”