On May 12, former US President Donald Trump signed an executive order aiming to slash the sky-high cost of prescription drugs in the United States. Citing the wide gap between American and global drug prices, Trump promised reductions of up to 59%, claiming the move would make medications more affordable “almost immediately.”
But here’s the twist—experts say: don’t hold your breath.
Trump’s "Most Favoured Nation" Strategy
At the heart of this executive order is the concept of “Most Favoured Nation” pricing. It means that drugmakers selling in the US would be required to match the lowest global price offered elsewhere. While this sounds revolutionary, the order is short on specifics and long on ambiguity. What exactly qualifies as “unreasonable” pricing or “discriminatory” deals? The administration hasn’t said.
Also, there’s no clear mechanism to penalize companies that don't comply. As Boston University health policy expert Alan Sager puts it, this may be “rhetoric, not reality.”
Why Are American Drug Prices So High Anyway?
Unlike many countries with centralized healthcare systems that negotiate bulk pricing, the US operates on a tangled web of private insurance, Medicare, and Medicaid. Drugmakers face little government pressure to lower prices, and political efforts to do so—whether from Trump or Biden—have often collapsed under pressure from the powerful pharmaceutical lobby.
Read more: Trump promises new order to bring down costs of some drugs
The Indian Stock Market’s Surprising Reaction
While the US market remained cautious, Indian pharma stocks cheered the announcement. On May 13, Granules India jumped 4%, Ajanta Pharma rose 3.4%, and Ipca Labs climbed 2.4%. Why? Because Trump’s move is seen as more bark than bite—one unlikely to dent Indian drug exports and possibly even beneficial if US firms look to import cheaper meds.
