3 Ways Trump’s Prescription Drug Order Could Affect Retirees’ Pockets
Written by
Dawn Allcot
Edited by
Zuri Anderson
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On May 12, President Donald Trump signed a sweeping executive order (EO) mandating that pharmaceutical companies have 30 days to set lower prices for prescription drugs in the U.S. If drugmakers fail to do so, per The Associated Press (AP), the U.S. Department of Health and Human Services will force their hands.
“We’re going to pay what Europe pays,” Trump said in a press conference reported by AP.
Could Trump’s executive order really help lower costs for prescription meds? Also find out if it can also offset inflation.
It Could Trigger Lower Prices
In an ideal, yet unlikely, scenario, if prescription drug companies voluntarily reduce prices or reach an agreement with the Department of Health, retirees might see some savings on some prescription drugs.
But without clear incentive to do so, it’s unlikely drug manufacturers will accept reduced profits. The pharmaceutical industry made more than $100 billion in profit from U.S. sales, according to a press release from Vermont Senator Bernie Sanders.
At best, the Department of Health could negotiate agreements for Medicare recipients. In 2024, then-President Joe Biden successfully negotiated a cap on insulin and gave Medicare the power to negotiate drug prices. The law only covered 10 prescription drugs but is projected to save Medicare D recipients as much as $1.5 billion in out-of-pocket costs in 2026. Extending this legislation to other medications would yield additional savings.
It Could Reduce Access to Necessary Medications
Pharmaceutical lobbyists, notably PhRMA, argued in a statement that lowering prescription drug prices could hinder research and development.
“It would mean less treatments and cures and would jeopardize the hundreds of billions our member companies are planning to invest in America,” Stephen J. Ubl, the president and CEO of PhRMA, said in a statement reported by AP.
Trump’s executive order could also reduce patient access to life-saving medications and increase U.S. reliance on drugs from China.
It Could Have No Effect
In his White House press conference, Trump said, “Drug prices will come down between 59 and 80, I guess even 90%.”
The statement left it unclear how much savings, if any, Americans might see. It’s worth acknowledging that also Trump introduced a plan seven years ago, which failed to drop prescription drug prices substantially.
Vermont Senator Bernie Sanders issued a press release doubting the effectiveness of the executive order. After agreeing with Trump that prescription drug prices are too high, Sanders stated, “[H]is executive order will be thrown out by the courts.”
Retirees aren’t likely to see relief from high drug prices soon, but the discussion should continue in Congress.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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Sources
- The Associated Press, “Trump signs executive order setting 30-day deadline for drugmakers to lower prescription drug costs.”
- The White House, “President Donald J. Trump Announces Actions to Put American Patients First by Lowering Drug Prices and Stopping Foreign Free-riding on American Pharmaceutical Innovation.”
- Bernie Sanders | U.S. Senator for Vermont, “NEWS: Sanders Statement on Trump’s Executive Order on Prescription Drugs.”
