Trump Initiates Measures to Lower Prescription Drug Prices in the U.S.

In a significant move, U.S. President Donald Trump has announced plans to implement new trade barriers against foreign pharmaceutical manufacturers, aiming to reduce drug prices in the United States by as much as 90%. This initiative was formalized with the signing of a new executive order at the White House, which mandates that pharmaceutical companies have a 30-day period to voluntarily lower their prices. Should there be insufficient progress, the U.S. government intends to take further action to ensure price reductions.

The execution of this executive order will involve several U.S. agencies. The Department of Commerce is expected to address foreign pricing policies that Trump deems unfair, while the Department of Health and Human Services will facilitate direct sales of medications at lower prices to American consumers. Additionally, the Food and Drug Administration (FDA) is set to evaluate the possibility of allowing imports from more industrialized countries. Discussions are also underway about potential export restrictions.

This initiative particularly targets medications with substantial price discrepancies between the U.S. market and other countries. However, specific drugs or product categories have not been disclosed at this time, and the government indicates that there will not be a limit to certain drug types.

Concerns are growing in Europe regarding the possibility of new tariffs on pharmaceuticals originating from the EU. In Trump's tariff package introduced in early April, medications were initially excluded, but an ongoing review by the U.S. government has raised uncertainties.

Trump has expressed that he believes the United States has been unfairly subsidizing healthcare for other nations. He has criticized the European Union for allegedly negotiating prices in a manner he considers more aggressive than that of China. According to Trump, it is time for Europe to take responsibility, asserting that other parts of the world will have to pay more while the U.S. will pay less.

A study conducted by the Rand Corporation highlights that prescription drugs in the U.S. can cost up to 40% more than in Europe. For instance, a month's supply of the popular blood thinner Eliquis is priced at $606 in the U.S., while it costs only $114 in Sweden and $20 in Japan.

This situation arises from the absence of a centralized governmental price regulation for pharmaceuticals in the U.S., where the pharmaceutical industry plays a dominant role in determining drug costs with limited governmental oversight.

During his campaign, Trump advocated for addressing this issue, proposing that the U.S. should not pay more for certain medicines than the country with the lowest global price, regardless of market size or economic status. He stated that the current situation, in which countries benefit at the expense of the U.S., must come to an end.

The U.S. market is crucial for the German pharmaceuticals sector, which views it as its most important export destination. In 2024, nearly 24% of German pharmaceutical exports, valued at EUR27 billion, were directed to the U.S.

Industry representatives anticipate far-reaching consequences from Trump's announcement. A consulting firm, Simon-Kucher, warned that a decline in U.S. revenues could jeopardize funding for research, production, and jobs within Germany. This could also lead pharmaceutical companies to increase prices in other countries, such as Germany, or delay market entry in Europe to protect U.S. pricing.

Officials from the German Federal Ministry of Health refrained from speculating on the potential impacts of the U.S. drug price strategy, emphasizing that the practical outcomes of the announced measures remain uncertain. In Germany, the assessment of medical benefits plays a crucial role in price negotiations between public health insurers and the pharmaceutical industry.

The Association of Research-Based Pharmaceutical Companies (vfa) in Germany characterized Trump's executive order as a wake-up call for Europe, warning that international price caps based on the lowest prices could hinder investment in research and delay access to innovative medicines.