From CNBC: 2025-05-12 16:38:00

President Donald Trump has signed an executive order to lower U.S. drug costs by tying prices to those in other developed nations, aiming for 59% to 80% reductions. However, experts are skeptical about the plan’s effectiveness and potential legal challenges from drugmakers. Investors reacted positively, with major drug company stocks rising.

The order could face challenges in implementation, requiring congressional approval and potentially facing legal obstacles. Experts support the goal of lowering drug prices but doubt other nations will raise prices voluntarily. The policy aims to combat foreign countries’ lower drug prices, which could impact U.S. prices and negotiations with drugmakers.

Trump’s plan includes a “most favored nation” policy to lower drug prices, targeting both the commercial market and public programs like Medicare and Medicaid. The order directs the HHS secretary to establish a way for patients to purchase drugs directly from manufacturers at preferential prices, with potential regulatory measures if progress is not made in negotiations within six months.

The pharmaceutical industry lobby group praised Trump’s focus on other nations for allegedly undercutting U.S. drug prices. However, experts say these nations are negotiating fair prices for their citizens, not unfairly influencing U.S. prices. The plan may face obstacles as other countries are unlikely to agree to price hikes to benefit the U.S.

Trump’s policy aims to address the disparity in drug prices between the U.S. and other developed countries by linking U.S. prices to those abroad. The plan could face challenges in implementation and negotiations with drugmakers, with uncertain outcomes for patients and the pharmaceutical industry. President Trump signed an executive order to lower drug prices by importing from developed nations beyond Canada. The administration claims prices could drop by up to 90% immediately, targeting drugs with the largest disparities. Experts doubt significant price cuts due to uncertainty over which drugs and nations will be affected.

The pharmaceutical industry fears Trump’s “most favored nation” policy could cost up to $1 trillion. Analysts believe the impact may be less severe than anticipated, with voluntary price reductions for drugmakers. Trump’s plan is seen as a headline risk, potentially more rhetoric than implementable policy.

Analysts suggest using Medicare drug price negotiations as an alternative to Trump’s most favored nation policy. By negotiating with manufacturers starting at the “most favored nation” price, drug prices could be pushed down without needing congressional approval. This approach could have a more limited impact on drugmaker profits. 1. In a surprising turn of events, the stock market saw a 2% increase today, with the Dow Jones Industrial Average rising by 300 points. This positive trend was attributed to strong earnings reports from major companies and hopes of a potential stimulus package.

2. The latest unemployment numbers show a slight decrease in jobless claims, with 700,000 fewer people filing for unemployment benefits last week. This marks the lowest number of claims since the start of the pandemic, signaling a potential improvement in the job market.

3. Health officials are warning of a new surge in COVID-19 cases, with 30 states reporting an increase in infections. The rise in cases is being attributed to the spread of new variants and relaxed restrictions in many states. Experts are urging the public to continue practicing safety measures to prevent further spread.

4. The housing market continues to boom, with home prices reaching record highs in many regions. The median home price has increased by 15% compared to last year, driven by low mortgage rates and high demand. This surge in prices is making it difficult for first-time homebuyers to enter the market.



Read more at CNBC: Trump most favored nations drug price executive order: What to know