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The basics:

• Trump signs executive order to cap drug prices using global benchmarks
• NJ pharma leaders warn move will hurt US innovation, jobs
• Industry trade groups oppose importing foreign pricing models

After President Donald Trump signed a sweeping executive order aimed at cutting the cost of prescription drugs in the U.S., New Jersey’s pharmaceutical industry is speaking out about the plan.

The May 12 presidential directive instructs Health and Human Services Secretary Robert Kennedy Jr. to develop direct-to-consumer purchasing programs for manufacturers to sell pharmaceutical products to U.S. patients at “the most-favored-nation price.”

After that, the administration hopes to begin negotiating with drugmakers on new costs. If nothing comes of those talks, the government will then impose a “most favored nation” pricing model to cap U.S. prices at the lowest rates paid by other similarly wealthy countries, according to Trump.

Great expectations

The executive order authorizes the U.S. Department of Commerce and U.S. Trade Representative Jamieson Greer to take “all appropriate action” against “unreasonable and discriminatory” policies in foreign countries that suppress drug prices abroad. The U.S. Food and Drug Administration will also consider expanding drug importation from other countries besides Canada, where drug prices are often cheaper, White House officials said.

The administration did not specify which medications it will subject to price reductions under the policy. However, it did say the plan would include GLP-1 drugs, like Wegovy, Ozempic and Mounjaro.

White House officials reportedly anticipate that drug prices will begin to come down almost immediately, since they expect drug manufacturers will work quickly with the administration.

Additionally, since the policy appears to focus on government purchase costs for Medicare and Medicaid, it does not address the costs for Americans who carry private health insurance.

Trump attempted to implement a similar strategy to drive down drug prices during his first term, but a federal judge blocked the move in 2020. This time, the policy encompasses a broader set of federal actions.

High-price legacy

When it comes to prescription drugs, the U.S. has paid more than other similarly wealthy countries for decades, according to a 2024 study from the Rand Corp., a public policy think tank. In general, Americans pay 2.78 times more for medication than 33 other nations, the report found.

In a social media post, Trump wrote:

For many years the World has wondered why Prescription Drugs and Pharmaceuticals in the United States States of America were SO MUCH HIGHER IN PRICE THAN THEY WERE IN ANY OTHER NATION, SOMETIMES BEING FIVE TO TEN TIMES MORE EXPENSIVE THAN THE SAME DRUG, MANUFACTURED IN THE EXACT SAME LABORATORY OR PLANT, BY THE SAME COMPANY??? It was always difficult to explain and very embarrassing because, in fact, there was no correct or rightful answer. The Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the ‘suckers’ of America, ALONE. Campaign Contributions can do wonders, but not with me, and not with the Republican Party. We are going to do the right thing, something that the Democrats have fought for many years.

He went on to describe his move as “one of the most consequential Executive Orders in our Country’s history.”

“Prescription Drug and Pharmaceutical prices will be REDUCED, almost immediately, by 30% to 80%. They will rise throughout the World in order to equalize and … Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before. Additionally, on top of everything else, the United States will save TRILLIONS OF DOLLARS,” Trump wrote.

‘Bad deal’

Trade group Pharmaceutical Research and Manufacturers of America (PhRMA) has come out against the executive order, calling it a “bad deal for American patients and workers.”

In a statement, PhRMA President and CEO Steve Ubl said, “To lower costs for Americans, we need to address the real reasons U.S. prices are higher: foreign countries not paying their fair share and middlemen driving up prices for U.S. patients. The Administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines. U.S. patients should not foot the bill for global innovation.”

“The U.S. is the only country in the world that lets PBMs, insurers and hospitals take 50% of every dollar spent on medicines. The amount going to middlemen often exceeds the price in Europe. Giving this money directly to patients will lower their medicine costs and significantly reduce the gap with European prices,” he said.

“Importing foreign prices from socialist countries would be a bad deal for American patients and workers. It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America – threatening jobs, hurting our economy and making us more reliant on China for innovative medicines,” Ubl said.

Cause for concern

BioNJ President and CEO Debbie Hart said her organization is “deeply concerned about the Most Favored Nation Executive Order issued by President Trump.”

“This concept, which intends to link prescription drug prices that are paid in the United States, to those in other nations, is a deeply flawed attempt to enable the government to control prices which economic assessments have shown will not only decimate innovation in the life sciences — but will also essentially mimic policymaking in nations that generate a fraction of the diversity of treatments and cures that American companies have been able to bring to patients,” she wrote.

“New Jersey is home to one of the most productive centers of biomedical innovation in the world. We are tremendously proud that our state produces so many new and effective medications for patients globally. I’m very hopeful that policymakers in D.C. will appreciate that the implementation of a policy concept like this would not only inhibit our state’s ability to innovate — it will mean that patients will have access to fewer new treatments and cures,” said Hart.

[T]he implementation of a policy concept like this would not only inhibit our state’s ability to innovate — it will mean that patients will have access to fewer new treatments and cures.
– Debbie Hart, BioNJ president and CEO

She went on to say, “BioNJ will continue to connect with members of multiple state congressional delegations to convey why this is misguided policymaking and how it will fail to redound to the benefit of anyone other than our nation’s economic competitors who are aggressively pursuing policies to foster innovation in their own life sciences sector rather than inhibit it.”

Round peg, square hole

Chrissy Buteas, president and CEO of the HealthCare Institute of New Jersey, said she believes the policy “won’t favor American patients or New Jersey jobs.”

“This idea takes parts of socialized health care from other countries and tries to fit them into America’s health care system. This is like putting regular gasoline into a diesel engine. We have the strongest, most robust, and most advanced health care system in the world. Putting that European gasoline into an American diesel engine would make it likely the whole thing breaks down,” she said.

Buteas continued, “The world unfairly freeloads on the American R&D that delivers remarkable new treatments and cures for patients. Instead of importing failed socialized medicine policies, we should focus on forcing foreign countries to pay their fair share for the cutting-edge medical advances that America’s global leadership makes possible.”