Trump to slash drug prices – 5 reasons prescription drugs are so expensive in the U.S.

Trump has announced that he will sign executive order to slash prices of medicine by up to 80 % – but why are prescription drugs in the U.S. so expensive?

Cheaper medicine on the horizon

President Donald Trump has said on Truth Social, that he will sign an executive order to slash prices on prescription drugs monday. “I will institute a most favoret netion’s policy whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the world,” the President wrote.

Up to 10 times the cost

According to the President, prescription drugs in the U.S. is sometimes five to ten times as expensive as in the rest of the world – but why is this?

Reason #1: Advertising

According to Harvard Health Publishing, the practice of Direct-to-consumer advertising is one of the reasons, drugs in the U.S. are so expensive. In 2022 drug companies spend nearli $8.1 billion in marketing. Advertised drugs tend to be far more expensive than non-advertised, although they are not always better.

Reason #2: PBM’s

Pharmacy benefit managers (PBM’s) handle drug benefits for large employers like Medicare and health insurance companies. They negotiate prices with bot health insurers and pharmacies, and their fees and incentives, which are often a share of total spending, contribute to inflating the price of medicine.

Reason #3: Drug makers’ profit motive

According to drug companies, it is expensive to develop new drugs as well as running the required trials to prove the effectiveness and safety prior to the release. That being said, a study published in 2022 found no connection between the cost of research and development of a drug and the evenutal price. According to Harvard Health, most of the top 30 pharmaceutical companies make billions of dollars in profit.

Reason #4: Legal maneuvers

Numerous drug makers use legal maneuvers to extend their time holding a monopoly on a particular drug. They do this by filing loads of patents and sue potential competitors. Some drug companies also make slight tweaks to their products so they can patent them as brand-new.

Reason #5: Cost-sharing

If higher copays, deductibles and premiums sound familiar to you, there might be a reason. In recent years, several insurers have shifted costs to patients through these, and although it is sometimes justified, higher costs could also discourage patients from seeking the care they need.

What happens now?

Trump will hold a press conference Monday where he will sign the executive order. Trump has not yeat specified how the executive order is supposed to have the intented effect on drug prices, but he is expecting to give further explanation during the press conference.