The case for slashing drug prices

Last week, President Donald Trump enacted an executive order named “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients," aiming to align U.S. drug prices with the lowest rates other developed countries charge. This policy builds upon previous, unsuccessful attempts from Trump’s first term and has ignited heated debate. Supporters view it as a long-overdue adjustment to a system that has made Americans bear the brunt of global pharmaceutical costs. Conversely, critics — primarily from the pharmaceutical industry and its supporters — consider it a dangerous threat to innovation that may hinder the development of life-saving medications. As always, the truth lies in the balance between these extremes, but the argument for reducing drug prices in the U.S. is not just persuasive — it’s imperative, rooted in both economic justice and moral duty.

The United States, with less than five percent of the global population, accounts for roughly three-quarters of worldwide pharmaceutical profits, a staggering imbalance that has persisted for decades. Americans pay, on average, nearly three times more for the same medications produced in the same factories as their counterparts in other wealthy nations. A study by the Kaiser Family Foundation found that the U.S. price for a 30-day supply of the diabetes drug Januvia was $614, compared to $76 in Canada and $64 in the United Kingdom. This disparity isn’t an accident; it results from a global pricing system in which foreign governments negotiate aggressively with drugmakers, leveraging their single-payer systems to secure deep discounts, while the fragmented and profit-driven U.S. market bears the brunt of research and development costs. As G. Dirk Mateer argues in RealClearMarkets, this setup effectively subsidizes innovation for the world at the expense of American patients, who are left to choose between crippling medical bills and forgoing essential treatments.

The human cost of this system is incalculable. A 2023 study revealed that 26 percent of Americans with prescription drug coverage still skipped doses or split pills due to cost, a figure that rises to 43 percent among those with chronic conditions like diabetes or heart disease. These are not abstract statistics; they are stories of real people — retirees rationing insulin, parents cutting corners on asthma inhalers for their children, cancer patients weighing survival against bankruptcy. The New York Times reported on a retired schoolteacher in Ohio who, unable to afford her $1,200 monthly rheumatoid arthritis medication, resorted to buying generics from a Canadian pharmacy, risking legal repercussions and inconsistent supply. Such desperation is a damning indictment of a system that prioritizes corporate profits over human lives.

The economic argument for lowering drug prices is equally robust. Mateer likens the U.S. government’s role as a massive purchaser of pharmaceuticals to that of a savvy corporate buyer like Walmart, which uses its market power to negotiate steep discounts. Yet, for decades, the federal government has failed to wield this leverage, leaving taxpayers and patients to foot inflated bills. The Congressional Budget Office estimated in 2024 that Medicare alone could save $100 billion over a decade by negotiating prices for just 20 high-cost drugs. As Trump's order proposes, extending such negotiations across federal programs and into the commercial market could yield savings in the hundreds of billions of dollars that could be redirected to infrastructure, education, or expanding healthcare access. AARP, in a statement praising the executive order, noted that “big drug companies have been ripping off America’s seniors,” forcing them to “skip medications they can’t afford.” Lower prices would not only alleviate this burden but also stimulate broader economic activity by freeing up disposable income for millions of households.

Critics of the most-favored-nation policy, led by the Pharmaceutical Research and Manufacturers of America (PhRMA), argue that slashing U.S. prices would choke off the revenue needed for research and development, stifling innovation. It’s a familiar refrain echoed by industry leaders like PhRMA CEO Stephen Ubl, who called the policy a “bad deal for American patients” that would “jeopardize treatments and cures.” But this argument rests on shaky ground. A 2021 study by the National Bureau of Economic Research found that only about 15 percent of pharmaceutical revenue is reinvested in R&D, with the lion’s share going to marketing, stock buybacks, and executive compensation. Moreover, the U.S. government already funds a significant portion of early-stage drug research through the National Institutes of Health, which spends over $40 billion annually on biomedical research. As The New York Times noted in its May 2025 coverage, drugmakers’ claims of innovation at risk often obscure the fact that “the U.S. alone is not going to pay for innovation” when other nations could contribute more equitably to global R&D costs.

Skeptics also warn of unintended consequences, such as drugmakers withdrawing from lower-margin international markets or raising prices abroad to circumvent the most-favored-nation clause. Yet, this scenario assumes that pharmaceutical companies would willingly abandon profitable markets like Europe and Japan, a move that seems unlikely given their reliance on global revenue streams. Such withdrawals could increase domestic drug supply, a prospect that Trump reportedly welcomes. More critically, the threat of tariffs and import restrictions, as outlined in the executive order, gives the administration leverage to prevent such gaming of the system.

The political optics of the policy are undeniable, particularly for a president whose populist rhetoric has long railed against elites fleecing ordinary Americans. Trump’s order, announced alongside Health and Human Services Secretary Robert F. Kennedy Jr., taps into a bipartisan well of frustration with Big Pharma’s unchecked power. Yet the policy’s success hinges on navigating a gauntlet of legal and practical challenges. Courts and industry lawsuits blocked Trump’s earlier attempts at most-favored-nation pricing in 2017 and 2020. Politico notes that the current order’s broad scope — extending beyond Medicare to include commercial markets potentially — may exceed executive authority without congressional backing. The Inflation Reduction Act of 2022, which empowered Medicare to negotiate prices for select drugs, offers a complementary tool, but its limited scope underscores the need for bolder action.

For all its risks, the most-favored-nation policy represents a rare chance to rebalance a profoundly inequitable system. It’s not about punishing pharmaceutical companies; it’s about ensuring that Americans aren’t punished for their government’s failure to negotiate as fiercely as other nations do. The American Thinker framed it starkly: “If Germany pays $45 for a drug, we’re not paying $450.” This isn’t socialism, as critics claim; it’s basic fairness, the kind of hard-nosed dealmaking Trump has long championed. The alternative — preserving a status quo where Americans subsidize the world’s medicines while rationing their own — is not only unsustainable; it’s unconscionable.

Lowering drug prices won’t solve every ill in America’s healthcare system, but it’s a critical step toward a future where no one has to choose between medicine and survival. The fight will be messy, with court battles and industry pushback inevitable. But the moral and economic case is clear: when the largest buyer in the world demands a better deal, it’s not just good business — it’s a lifeline for millions.