From Most Expensive to Most Favored: How the Trump Administration Is Bringing Down Prescription Drug Prices
Key Findings
- Americans pay significantly more for the same prescriptions.
- The Trump administration’s most-favored-nation policy has helped to address high drug costs.
- Expanding on the most-favored-nation approach has presented additional opportunities for savings.
- Most-favored-nation will not adversely affect research and development.
- Other policies like 340B have failed to deliver meaningful savings.
Overview
Prescription drug prices have long been a source of frustration for Americans. As many as 18 million Americans were unable to afford needed prescriptions in recent years.1 This is unsurprising, considering that from 2000 to 2024, prescription drug spending by American consumers increased nearly four-fold.2
In fact, prescription drugs are one of the areas that Americans pay the most out of pocket as a share of total health care expenditures.3
But while prescription drugs have been far too costly for years, new and innovative policies implemented by the Trump administration have already begun to deliver much-needed relief.
Americans pay significantly more for the same prescriptions
American consumers are not just paying a significant amount for prescription drugs—they are also paying much more than what consumers in other wealthy countries are paying.
In 2022, U.S. prices for brand name prescriptions were 4.22 times the average price paid in other wealthy countries.4 This includes 4.45 times more than the average price paid in France, 3.85 times more than the average price paid in the United Kingdom, and 3.24 times the average price paid in Canada.5 As a result, while U.S. consumers accounted for about seven percent of the volume of brand prescriptions, they made up an astonishing 87 percent of the revenue of those same drugs.6 In other words, even though the domestic volume of purchases is a modest share, the U.S. comprises an inordinate proportion of brand name drug revenue and profits because domestic prices are so high.
In fact, prescription drugs consume roughly 2.8 percent of U.S. gross domestic product, more than twice as much as in other wealthy countries.7
Not only are prescription drug prices higher in the U.S. than in peer countries, but they have also been growing at a greater rate.
There is no single cause for the ever-increasing price of prescription drugs in the United States, although a fragmented reimbursement system, intermediaries like pharmacy benefit managers (PBMs), and a lack of price transparency, all bear a portion of the responsibility.8
Another key cause is the willingness of U.S. consumers to essentially finance the research and development associated with these drugs, creating a “free rider” problem with other countries.9 President Trump has rightly described this as “global freeloading” where “inflated prices in the United States fuel global innovation while foreign health systems get a free ride.”10
These harsh realities and trends have been the underlying motivation behind the Trump administration’s groundbreaking “most favored nation” policy on prescription drugs—a policy that has already reaped substantial benefits.
The Trump administration’s most-favored-nation policy has helped to address high drug costs
To tackle the rising cost of prescription drugs, in May 2025, President Trump signed an executive order outlining a most-favored-nation approach to drug pricing.11 The core concept of the most-favored-nation approach is that patients in the United States should not pay more for prescription drugs than the lowest price negotiated by other wealthy countries.12
The president’s executive order outlined a multifaceted approach to implementing the most-favored-nation model, integrating the activities of multiple government agencies to maximize cost savings.13 Already, this effort has produced extremely favorable results and has lowered prescription drug costs for Americans.
Since the executive order was issued, President Trump has negotiated 14 most-favored-nation deals with major pharmaceutical manufacturers to enable the direct purchase of low-cost prescription drugs.14 These include substantial discounts on major brand name blood thinners, GLP-1s, diabetes medications, cholesterol-reducing medications, and much more.15-16
By listing these drugs through TrumpRx—a government platform to connect consumers directly with drug manufacturers to secure low prices—Americans will have an easy-to-access resource that links patients with affordable prescription drugs without PBMs, pharmacies, or insurance companies acting as middlemen to distort and raise prices.
Expanding on the most-favored-nation approach has presented additional opportunities for savings
Not only has the Trump administration’s most-favored-nation policy offered a less expensive alternative for Americans to directly purchase medications from drug manufacturers, but it has also led to new ways to achieve savings for patients and taxpayers alike.
For example, as part of President Trump’s most-favored-nation effort, the Centers for Medicare & Medicaid Services (CMS) launched their GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model.17 This pilot approach to drug pricing in the Medicaid program will allow state Medicaid agencies to participate in an innovative, most-favored-nation-aligned structure to achieve prescription drug savings.18
CMS has also unveiled the Guarding U.S. Medicare Against Rising Drug Costs (GUARD) and Global Benchmark for Efficient Drug Pricing (GLOBE) models.19-20 These two models would assess rebates for certain drugs payable under Medicare Part D and Part B, respectively, if prices exceed those paid in comparable countries for the same drugs.21-22
As a result, under the leadership of U.S. Health and Human Services Secretary Robert F. Kennedy Jr. and CMS Administrator Dr. Mehmet Oz, the Trump administration is amplifying the most-favored-nation approach to savings in both Medicaid and Medicare.
Most-favored-nation will not adversely affect research and development
Critically, most-favored-nation will not have a negative effect on research and development for pharmaceuticals. For far too long, Americans have disproportionately shouldered the burden of financing an outsized share of research and development.23 In fact, on a GDP per capita basis, wealthy European nations spend roughly half on research and development compared to what the United States spends.24
Under a broad most-favored-nation approach, research and development would not disappear—it would simply be more evenly spread over a larger group of countries’ consumers instead of being loaded onto U.S. patients. In fact, after key drug pricing deals were announced with several manufacturers in December 2025, their stock prices increased.25
Already, agreements are being reached with foreign governments to more fairly rectify long-standing imbalances in pharmaceuticals, such as the outsized share of research and development that the United States has borne.26 Similarly, major drug companies like Eli Lilly have announced they are planning to raise prices overseas in exchange for lowering domestic prices.27
Most-favored-nation won’t reduce spending on research and development—it will simply spread it out more fairly among other countries.
Other policies like 340B have failed to deliver meaningful savings
Another reason that the most-favored-nation approach is essential is because other supposed prescription drug savings programs have failed to deliver real benefits. For example, the 340B Drug Discount Program (340B) operates by enabling certain health care providers to purchase prescription drugs at a discount from manufacturers.28 However, the program has not meaningfully reduced costs.29 In fact, participating providers are encouraged to purchase high-cost prescription drugs to receive more substantial discounts under 340B that effectively pad providers’ bottom lines.30 Furthermore, only a fraction of these providers pass along discounts to patients.31-32 It is perhaps no surprise that provider participation in 340B has exploded while prescription drug savings have been minimal at best.33
Unsurprisingly, the Government Accountability Office has flagged numerous issues relating to lackluster oversight as it pertains to ensuring providers are actually eligible for the program, as well as providers banking duplicate discounts.34-35
340B has failed to deliver the outcomes that Congress intended when the program was established. Instead, prescription drug prices have continued to skyrocket, with few discounts passed along to patients. Instead, hospitals and other providers continue to benefit thanks to loopholes. Improving 340B oversight is crucial and should be coupled with adopting a most-favored-nation approach to deliver meaningful reductions in prescriptions.
The Bottom Line: Congress should codify and expand on the Trump administration’s most-favored-nation policy.
Congress can and should double down on the Trump administration’s success by grandfathering in the most-favored-nation deals that have achieved historic savings for Americans, while also affirming congressional support for the policy.
Congress should go one step further by requiring all government programs and patients paying out of pocket to be charged the most-favored-nation price or a negotiated equivalent. Under this approach, if prescription drug manufacturers negotiate a special deal with the federal government, they can offer the prices for brand prescriptions established under that deal. But in the absence of a special deal, government and out-of-pocket payers would pay the most-favored-nation price as a default across the board.
President Trump’s implementation of the most-favored-nation initiative has been a tremendous success for American consumers. It has helped to expand access to critical prescription drugs at a price point that patients can afford, while opening up opportunities for innovation in other areas like Medicare and Medicaid. Congress should affirm their support for most-favored-nation approach and take it to the next level through an even stronger framework.
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