The ongoing effort to address the high cost of prescription drugs in the United States has gained traction, uniting Americans across the political spectrum. The consensus is clear: seniors should not have to ration their medications, and cancer patients should not rely on fundraising campaigns to afford necessary treatments. In response, President Donald Trump has focused on drug pricing for over a year, aiming to initiate significant changes. Nevertheless, the details of his approach raise critical questions about its effectiveness and sustainability.
Negotiations with Big Pharma Raise Concerns
Trump’s administration has negotiated agreements with major pharmaceutical companies, which appear beneficial at first glance. However, a closer examination reveals significant flaws in these deals. One of the most pressing issues is that the U.S. government has effectively delegated the determination of drug prices to other countries. U.S. government and private insurers often pay two to three times more for medications developed domestically compared to their international counterparts, a situation Trump has characterized as “global freeloading.”
In May 2025, Trump signed an executive order aimed at reducing prices paid by Medicaid by aligning them with those in other nations. This order mandated that pharmaceutical companies voluntarily lower their prices or face substantial tariffs on their products. This approach has prompted several companies to publicly commit to altering their pricing strategies in exchange for tariff relief. Currently, Regeneron Pharmaceuticals stands as the last major holdout among the 17 targeted firms.
The Ambiguities of Price Benchmarks
While the agreements negotiated by the Trump administration may seem advantageous for patients and taxpayers, a lack of transparency regarding the pricing benchmarks complicates the evaluation of these deals. The prices paid by other countries remain confidential, making it challenging to assess whether the U.S. is indeed securing competitive rates. Previous legislation has already been enacted to reduce Medicaid drug costs, suggesting that the U.S. may be achieving better deals than anticipated.
For most Medicaid patients, the cost of prescriptions typically ranges from just a few dollars, which raises further questions about the necessity of these new pricing strategies. There is also concern about the potential for manipulation by both countries and manufacturers. For instance, companies could inflate prices abroad, thereby skewing the benchmarks used in the U.S. while offering undisclosed discounts. Additionally, many new medications are introduced in the U.S. before reaching foreign markets, complicating the administration’s reliance on international pricing.
Beyond the ambiguity surrounding the pricing agreements, the underlying premise warrants scrutiny. The Trump administration’s strategy appears to rest on the assumption that the U.S. should rely on other nations to define the value of medications for American consumers, rather than establishing an independent valuation system. This approach extends to other areas as well, as evidenced by the recent pilot programs initiated by the Centers for Medicare & Medicaid Services that aim to tie Medicare drug prices and rebates to costs in comparable countries. These five-year pilot programs will impact approximately one-quarter of the over 66 million Medicare beneficiaries in the United States.
The focus on drug pricing is a commendable initiative from the Trump administration. However, it is essential to recognize that American ingenuity can extend beyond merely creating new medicines. The U.S. has the capacity to develop an effective and self-sufficient system for making these essential drugs affordable for all citizens.
Lisa Jarvis, a columnist for Bloomberg Opinion, covers biotech, healthcare, and the pharmaceutical industry. Her insights provide valuable context to the ongoing discussions surrounding drug pricing reform in the United States.
