Trump Declares Major Drug Price Reform—Pledges Cuts of Up to 80%

Trump Declares Major Drug Price Reform—Pledges Cuts of Up to 80%

DECK
Sweeping executive order promises US patients the world’s lowest drug prices; pharma stocks nosedive globally amid investor panic.

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KEY FACTS

• What: President Trump to issue executive order capping US drug prices.
• Where: Announcement made via Truth Social; policy to take effect in Washington.
• When: Order signing scheduled for 9 a.m. Monday.
• Why: To end what Trump calls unfair overcharging of American consumers.
• Impact: Pharmaceutical stocks slump in US, Europe, and Asia.
• Uncertainty: Scope and enforcement details of the policy still unclear.

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SITUATION SNAPSHOT
As financial markets stirred ahead of the week’s opening bell, a wave of volatility hit global pharmaceutical stocks. President Donald Trump’s surprise announcement—delivered in trademark style on social media—sent tremors through the industry, promising what he called “FAIRNESS TO AMERICA” by aligning drug prices in the US with the lowest prices globally.

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WHAT WE KNOW
President Trump revealed plans to issue an executive order that will cap American drug prices to match those in the lowest-paying countries worldwide. “We will pay the same price as the Nation that pays the lowest price anywhere in the World,” he wrote. The move, he claimed, could slash domestic prescription costs by 30% to 80%.

Despite the lack of policy specifics, the statement triggered immediate investor concern. Major US drugmakers—including Eli Lilly & Co., Pfizer Inc., Bristol-Myers Squibb Co., and Merck & Co.—experienced early declines. European pharma giants such as Sanofi SA and AstraZeneca Plc also fell sharply, while Japan’s Topix pharmaceutical index suffered its steepest single-day drop in months.

The policy echoes ideas floated during Trump’s first term, including an earlier plan to anchor Medicare payments to prices in select foreign countries. That initiative was halted by a federal court, which ruled that proper regulatory procedures weren’t followed.

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WHAT’S NEXT
The executive order will be signed Monday morning, but implementation depends on several unknowns—chief among them whether the plan applies solely to federal programs like Medicare and Medicaid or extends to private insurance. Analysts also warn of legal and political hurdles: “There is no easy way forward, as the executive order needs to be passed by the Senate to become legislation,” wrote Jefferies analyst Cui Cui. Industry lobbying is expected to intensify in the coming weeks.

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VOICES ON THE GROUND
“The ‘suckers’ of America” have been paying inflated drug costs “for no reason whatsoever,” Trump asserted in his online message.

“This could shake the very foundation of how drug pricing is negotiated globally,” said Jared Holz, a strategist at Mizuho Securities, who noted that the biggest concern lies with high-value medications under Medicare Part B and drugs used widely in Medicaid.

Billionaire investor Bill Ackman, who previously shared similar ideas online, posted that Trump “might have picked up the concept” from a proposal he floated in March.

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CONTEXT
American consumers have long shouldered the highest prescription drug prices in the world, a structure that has funded pharmaceutical innovation but also raised ethical and economic concerns. While the Inflation Reduction Act—passed under former President Joe Biden—introduced limited price negotiations for Medicare, Trump’s new directive seeks to dramatically accelerate that momentum.

His earlier attempt to institute a foreign price index collapsed under legal pressure. This new approach could invite similar scrutiny, with both courts and Congress poised to weigh in. The policy’s effectiveness may ultimately hinge on whether it can survive legal, legislative, and industry resistance.

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REPORTER INSIGHT
Behind the charged language and sweeping promises lies a calculated political play: appealing to Americans frustrated by medical costs while challenging the global status quo of pharmaceutical pricing. In a rare moment of unity across markets, Wall Street’s reaction signaled one truth—something seismic may be on the horizon.