Is President Trumps EO on Drug Prices ‘Price Control’

Well, yes and no. Maybe. It depends on how you look at it. And it depends on what the results will be. 

It’s hard to say. It’s complicated. 

How is that for a non-answer? Pretty good, eh? 

There’s a reason for my not giving a definitive answer, because the way drug pricing worldwide works really is complicated, and to say that there is a free market in pharmaceutical pricing is as accurate as saying that the US medical system is a free market. 

In neither drugs nor medical care is there a free market, although we are much closer to one when speaking of generic drugs, at the very least when not bought through insurance companies or pharmacy benefit managers. 

First, a reality check: It is true that consumers in the United States pay much higher prices than those in other countries, and while Big Pharma is no more or less greedy than any other big business, it certainly tries to maximize profits and uses the rules of the road to do so. 

In most countries–especially those with socialized medical systems–there really ARE price controls in which the government medical system can tell pharma companies what price they are willing to pay, and the pharma companies have little choice but to sell at the mandated price or exit the market. Since the price paid by the governments will be marginally higher than the cost of production, it would be irrational for the companies NOT to agree, at least in most cases. Each unit sold will incrementally increase profits–at least if the companies can recoup ancillary costs and make a decent profit elsewhere. 

RFK Jr. just dismantled the claim that Trump’s executive order to lower drug prices is “price control.”

“It’s getting rid of price controls.”

“We are subsidizing socialized medicine in Europe on the backs of US patients who are going bankrupt to pay these prices.”

“The… pic.twitter.com/GjJjtWkdIn

— End Tribalism in Politics (@EndTribalism) May 12, 2025

RFK Jr. just dismantled the claim that Trump’s executive order to lower drug prices is “price control.”

“It’s getting rid of price controls.”

“We are subsidizing socialized medicine in Europe on the backs of US patients who are going bankrupt to pay these prices.”

“The European governments have told the drug companies, ‘Here is the maximum price we’re gonna pay. We’re not gonna pay anymore. If you don’t give us this price, you can’t sell it in our country.’”

“That is the epitome of a price control.”

“We have all these Americans who we are getting better, but then they are bankrupt and they have no money.”

“So President Trump is gonna get rid of the price control.”

That is where the US comes in. Since we don’t have a price control system, the pharmaceutical companies price their products as high as the market will bear and make the lion’s share of their profits here, funding their costs of research, development, management, employees, and, of course, shareholder value boosting in the United States. 

Pharma companies make marginal gains by manufacturing and selling their products overseas, but if they charged the same prices in the US, they would not be able to research, innovate, or in some cases even recoup the costs of bringing up new manufacturing lines. 

That’s why Trump rightly says that US consumers bear a disproportionate cost of research and development–because we do. 

Trump’s Executive Order aims to eliminate the imbalance in prices between the United States’ market and that in other countries. The theory, at least, is to force prices to rise abroad and reduce them in the United States, distributing the burden of paying for profits, research and development, and the cost of capital evenly around the world. 

The US will no longer be subsidizing Europe’s medical costs. 

That’s when NIH Director Jay Bhattacharya stepped up with his own blunt assessment.

He called what it was: long overdue.

“What President Trump has done is a historic measure that should have been done a long time ago.”

He said the massive price differences between countries… pic.twitter.com/kTAvPm29Gw

— The Vigilant Fox 🦊 (@VigilantFox) May 12, 2025

Now comes the big unknown: can Trump pull this off? The Executive Order doesn’t really outline the tools that his administration will use as much as the ultimate goal. Lots of countries that are already straining to keep their socialized medical systems afloat are being coerced into paying substantially higher prices (hard to say how much) to make prices more. 

The best way to reduce drug prices in the U.S. is to make it illegal for drug companies to sell the same drugs abroad for lower prices than they sell them for here.

This will force a globally negotiated price that will be lower than the prices that U.S. consumers pay now and…

— Bill Ackman (@BillAckman) March 8, 2024

The best way to reduce drug prices in the U.S. is to make it illegal for drug companies to sell the same drugs abroad for lower prices than they sell them for here. 

This will force a globally negotiated price that will be lower than the prices that U.S. consumers pay now and higher than what foreigners pay now. 

Otherwise we are stuck with a system where American consumers subsidize drug development for the rest of the world. 

Ask any pharma company CEO. They will agree that the above approach will have the intended effect.

Needless to say, they will be reluctant to do so. Pharma companies can, in the short term, reduce prices in the US. But in the long term, research and development will grind to a halt unless other countries agree to picking up the tab that Trump is trying to make them pay. 

America supplies 75% of pharmaceutical revenue in the world.

Ozempic in America is $1,300 while in London it’s $88.pic.twitter.com/rb1LdEAA9n

— General™️ (@TheGeneral_0) May 13, 2025

You could argue that it would be irrational for purchasers abroad to sacrifice drug development in the future just to keep prices lower today, but since when were governments rational about protecting their citizens? Other countries are already rushing to kill off their ill, and they may prefer to keep going in that direction rather than renegotiate prices with Big Pharma.

Trump probably has some tricks up his sleeve to push these countries to budge, but until we see beyond this opening move, it will be hard to know where things will wind up. 

So, is Trump imposing price controls? Kinda sorta maybe. But, as with his tariffs, the goal is to make the entire system fairer and freer–to combat a regime of price controls that already exists.