President Donald Trump on Monday said his administration’s new plan to impose price controls on prescription medications was inspired by hearing from a friend about the low cost of weight loss medication in the United Kingdom compared to what the same person paid for the same medication in America.
Trump used the bizarre anecdote as he was explaining the genesis of the executive order he signed just before leaving the White House for a trip to Saudi Arabia, Qatar and the United Arab Emirates. It purports to impose what he described as a “most-favored nation “ policy on pharmaceutical prices by insisting that manufacturers charge Americans the same price as the lowest-paying developed countries, all of which have single-payer health systems that can use their market power to negotiate prices directly with drug makers.
He told reporters of a taking a call from a “friend” who he described as a “highly neurotic, brilliant businessman” and “seriously overweight” about the cost of what Trump called “the fat shot drug.”
“I’m in London, and I just paid for this damn fat drug I take. I said, it’s not working. They said, he said, I just paid $88 and in New York I paid $1,300 What the hell is going on? He said. So I checked, and it’s the same box made in the same plant by the same company. It’s the identical pill that I buy in New York, and here I’m paying $88 in London, in New York, I’m paying $1,300,” Trump recounted to the assembled journalists in the Roosevelt Room of the White House.
Continuing, Trump said he later confronted a pharmaceutical company representative about the discrepancy and complained that the companies had been “justifying this crap for years” based on research and development costs for new medications.
“Well … other countries should pay research and development, too. It’s for their benefit … so for the first time in many years, we’ll slash the cost of prescription drugs, and we will bring fairness to America,” he said, adding that his plan would cause prices to drop by as much as 80 percent for medications.
He also announced that he’s ordering Commerce and USTR to “begin investigations into foreign nations that extort drug companies by blocking their products unless they accept bottom line and very low dollar amounts for their product, unfairly shifting the cost burden onto American patients.”
He threatened to cut off American imports of non-pharmaceutical products from foreign nations unless those governments agree to pay higher prices for medications purchased by their single-payer health services, citing European Union countries such as Germany as an example.
“The biggest thing we’re going to do is we’re going to tell those countries, like those represented by the European Union, that, you know, that game is up. Sorry. And if they want to get cute, then they don’t have to sell cars into the United States anymore,” he said.
A White House official who briefed reporters on the order Trump signed said it directs the Department of Commerce and the Office of the U.S. Trade Representative to “take all appropriate action against unreasonable and discriminatory policies in foreign countries that suppress drug prices abroad” and orders the Department of Health and Human Services to “facilitate … direct-to-consumer sales” of prescription drugs at “most-favored nation prices” that will be set based on targets established by the Health and Human Services secretary within 30 days.
“This will open round of negotiation between the Health and Human Services and industry, and if adequate progress is not made towards these price reduction targets, the Secretary of Health and Human Services will impose most favored nation pricing via rulemaking,” the official said..
It was not immediately clear what legal authority was being cited to justify imposing price controls on medications, and White House officials who were pressed on the matter during the briefing early Monday did not specify the authorities being invoked beyond vague “national security” concerns.
The order Trump signed does not explicitly set out strict price limitations for medications, but it does direct the HHS secretary to “propose rules that impose most-favored-nation pricing” and “take other aggressive measures to significantly reduce the cost of prescription drugs to the American consumer and end anticompetitive practices” if manufacturers don’t drop their prices for US buyers over the next month.
The administration’s demand for “most favored-nation” price controls and Trump’s grievances against European nations with lower drug costs does not appear to take into account the major differences between the American health care system, which is largely managed by private health insurers that pay for prescription drugs, and the European and other developed nations that have single-payer health care systems along the lines of the United Kingdom’s National Health Service. Because a single-payer system has more leverage when negotiating prices with drug companies than multiple private insurer, countries with such systems often pay lower costs for medications.
Under Trump’s predecessor, then-president Joe Biden, the federal government began negotiating for the government-run Medicare health system to pay lower prices for certain drugs under authority granted to the Center for Medicare and Medicaid Services in the Inflation Reduction Act that Biden signed into law in 2022.
That landmark law established procedures by which CMS would negotiate with pharmaceutical companies, reversing a decades-old ban enacted by Republicans in Congress as part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.
