Trump Signs Executive Order to Cut Drug Costs: What Employers Need to Know

President Donald Trump has signed a new executive order that aims to reduce prescription drug costs through a “most favored nation” pricing policy. This order directs the U.S. government to pay no more for certain prescription drugs than other developed nations pay as their lowest price.

Additionally, it instructs the Secretary of Health and Human Services to create a system that allows Americans to purchase these drugs directly from manufacturers—who must offer them at “most favored nation” prices or face additional regulatory oversight.

The executive order seeks to cut prescription drug prices by 59 percent.

The order further targets Pharmacy Benefit Managers (PBMs) by promoting direct-to-consumer sales and increasing transparency around PBM compensation structures. To support implementation, the order requires federal agencies to notify pharmaceutical manufacturers of applicable “most favored nation” prices within 30 days.

I'm encouraged by the intent behind President Trump's executive order to lower prescription drug prices, especially the effort to bring U.S. costs more in line with those in other developed countries. As a pharmacy benefits consultant, I see every day how high drug prices impact patients and plan sponsors alike.
 
That said, I'm cautiously optimistic. While the policy direction is promising, the actual impact will depend on how—and if—this order is fully implemented. There's often a big gap between policy announcements and real change at the pharmacy counter. Still, it's a conversation we need to keep pushing forward.
 
— Eric Elliot, Director of Strategic Growth, OneDigital Pharmacy Consulting

Potential Impacts on Drug Approvals and Exports

Please also note that subsequent reviews may lead to the revision or revocation of approvals for previously FDA-approved drugs if they determine the drugs are unsafe, ineffective, or improperly marketed. Additionally, the administration may restrict the export of certain drugs if the Secretary of Commerce finds that such exports contribute to “global price discrimination.”

The specific drugs covered by the order remain to be seen. In his first term, the Trump administration also attempted to lower prescription drug prices via executive order. That order, which only covered drugs under Medicare Part B, the Biden administration blocked from going into effect early in its term.

According to the Center for Medicare and Medicaid Services (CMS), Medicare Part B “covers outpatient prescription drugs under certain conditions, for example,

• drugs provided as part of (or incident to) a physician’s service, and
• drugs furnished for use with covered durable medical equipment.

Many Part B-covered drugs are infused or injected by physicians such as oncologists, rheumatologists, and urologists. Generally, Part B covers only drugs that are not usually self-administered.”

Potentially, a key difference with this order is the expanded impact on the private payer sector.

Why This Matters for Employers

President Trump's 2025 executive order on drug prices mirrors his 2021 initiative but introduces new elements that aim to enhance transparency and reduce the influence of PBMs. While the order signifies a strong stance on drug pricing reform, its success will depend on implementation and potential legal outcomes. Stakeholders across the healthcare industry will be closely monitoring the administration's actions and any ensuing legal proceedings.

Stay informed about the latest compliance news and significant actions from the administration impacting organizations by viewing and bookmarking our Federal Policy Hub for real-time updates and expert analysis. In our latest Need-to-Know Compliance Recap for Employers (May 2025 Update) OneDigital’s Compliance Consulting team discusses the latest developments employers need to navigate.

For more information on the latest pharmacy benefits news, connect with our OneDigital Pharmacy Consulting team.