Executive Summary

In 2025, President Trump has launched the most aggressive suite of drug-pricing interventions of his political career. The centerpiece is a Most-Favored-Nation (MFN) pricing strategy, backed by a series of voluntary deals with major pharmaceutical companies and a new TrumpRx direct-to-consumer platform. These agreements:

• Peg many Medicaid and TrumpRx prices to those in other developed countries – the “MFN price”.The White House+1

• Deliver headline price cuts of 60–90% for selected chronic-disease and specialty drugs when bought via TrumpRx.The White House+1

• Promise billions in savings for Medicaid and significant discounts for uninsured and cash-pay consumers.The White House+1

• Are paired with R&D and manufacturing commitments of at least $150 billion in the U.S. and donations of key ingredients to a strategic pharmaceutical reserve.The White House+1

At the same time, Trump has:

• Revived and expanded MFN executive orders that aim to stop the U.S. from “subsidizing socialism abroad” by forcing manufacturers to match the lowest prices in peer countries.The White House+1

• Issued an April 2025 drug-pricing EO instructing HHS to reshape pieces of the Inflation Reduction Act (IRA) Medicare drug-price negotiation program and address the so-called “pill penalty” for small-molecule drugs.Sidley Austin+1

Critically, these moves do not replace the IRA’s statutory Medicare negotiations—those price cuts are still scheduled to kick in starting 2026–27 and are projected to save Medicare enrollees and the program billions.Centers for Medicare & Medicaid Services+1

With ≈95% confidence, drawing on available data, comparative experience, and economic theory, we can say:

• Patients in certain groups (Medicaid, uninsured, and some Medicare users) will see real, sometimes dramatic, out-of-pocket reductions on a limited but high-impact set of drugs.

• Total system-wide savings will be meaningful but smaller than rhetoric implies, and highly concentrated in a relatively short list of therapies.

• The policy mix tilts power away from PBMs and toward manufacturers and the federal executive, while trading regulatory threats for voluntary concessions and domestic investment.

• Long-term risks include market distortions, possible higher prices abroad, innovation-mix shifts, and politicization of drug pricing.

This brief unpacks the key mechanisms, impacts, and risks, and concludes with actionable policy recommendations for the American Transformation Forum.

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1. What Trump Has Actually Done on Drug Prices in 2025

1.1 The MFN Executive Order and strategy

On May 12, 2025, Trump signed the executive order “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” The Order states that Americans are overcharged relative to other wealthy nations and directs agencies to ensure U.S. patients have access to the lowest price paid in comparable countries (“MFN price”).The White House+1

Key elements:

• Agencies (HHS, CMS, etc.) are directed to use Medicaid, Medicare, trade leverage, and federal purchasing power to push drugmakers toward MFN pricing.The White House+1

• The Order dovetails with earlier Trump-era moves (2018–2020) and revives concepts from prior Part B/Part D MFN models that aimed to tie Medicare payments to foreign reference prices.Trump White House Archives+1

1.2 The April 2025 EO: Tuning the IRA, PBMs, and Medicare

On April 15, 2025, Trump signed a broader drug-pricing EO directing HHS to:Sidley Austin+1

• Seek a legislative fix for the IRA “pill penalty”—the rule that small-molecule drugs become eligible for Medicare negotiation after 9 years, versus 13 for biologics.Sidley Austin

• Issue additional guidance and transparency measures for the IRA Medicare Drug Price Negotiation Program.Sidley Austin+1

• Explore better alignment of Medicare payments with acquisition costs, and ways to stabilize Part D premiums.Sidley Austin

In other words, Trump is not repealing Medicare negotiation; he is reshaping it while layering MFN and voluntary deals on top.

1.3 The TrumpRx platform and voluntary deals with pharma

The administration has signed a sequence of voluntary pricing agreements with major drugmakers:

1. Eli Lilly & Novo Nordisk (November 2025) – MFN deals slashing prices for GLP-1 obesity and diabetes drugs (Ozempic, Wegovy, Zepbound, etc.) when bought through TrumpRx, with comparable reductions for Medicare and Medicaid. For example:

   • Ozempic and Wegovy cut from about $1,000–1,350/month to $350/month via TrumpRx.

   • Zepbound and similar drugs projected at ≈$346/month; possible future pills at $150/month.

   • Insulins like NovoLog and Tresiba capped at $35/month; Medicare co-pays around $50/month for GLP-1s.The White House

2. Nine additional pharma companies (December 19, 2025) – Amgen, Bristol Myers Squibb, Boehringer Ingelheim, Genentech, Gilead, GSK, Merck, Novartis, and Sanofi sign MFN-style deals:The White House+1

   • Medicaid prices on their products at MFN levels (aligned with other developed countries).

   • Large discounts for patients buying directly via TrumpRx, often 60–90% off U.S. list prices.

   • Examples: Repatha from $573 to $239; Epclusa from ~$24,920 to ~$2,425; Advair Diskus from $265 to $89; Januvia from $330 to $100; Plavix from $756 to $16, plus Sanofi insulin at $35/month.The White House

   • Companies commit to MFN pricing on future innovative medicines, repatriation of increased foreign revenue, and over $150B in U.S. manufacturing investments plus donations of critical APIs to a national reserve (SAPIR).The White House+1

News reporting confirms discounts up to 70% for some key drugs, tariff exemptions for cooperating firms, and a TrumpRx.gov platform selling discounted drugs directly to patients, potentially bypassing traditional PBM-dominated channels.AJMC+3Reuters+3Barron’s+3

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2. How Much Are Drug Prices Really Being Reduced?

We should separate out three layers of price reduction:

2.1 Statutory IRA Medicare negotiations (baseline)

Thanks to the Inflation Reduction Act of 2022, Medicare is already scheduled to pay substantially less for certain high-cost drugs starting in 2026. CMS estimates:Centers for Medicare & Medicaid Services+1

• $6 billion/year in net savings for Medicare from negotiated prices on the first 10 Part D drugs (≈22% reduction in net spending).

• $1.5 billion in out-of-pocket savings for beneficiaries in 2026 alone.

• Combined with the Part D out-of-pocket cap, many enrollees will pay around 50% less for some drugs.

Trump’s role here is to administer and adjust this program—he did not create it, but his administration is finalizing the second round of negotiated prices (15 drugs, including GLP-1s), which CMS projects will cut net spending by ≈44%compared to 2024 benchmarks.KFF+1

2.2 MFN-linked Medicaid and TrumpRx prices

The new MFN deals directly cut list and transaction prices in two main domains:The Guardian+3The White House+3The White House+3

1. Medicaid:

   • State Medicaid programs now access MFN prices for products from Lilly, Novo Nordisk, and the nine latest companies.

   • This likely yields billions in Medicaid savings—the administration says “billions,” and given the drugs involved (diabetes, obesity, cardiovascular, hepatitis, respiratory diseases), that claim is plausible, though we don’t yet have CBO or CMS scoring.

2. TrumpRx direct-to-consumer (DTC):

   • Patients buying via TrumpRx see dramatic per-unit price drops (e.g., Epclusa, Repatha, Advair, Ozempic, Wegovy).The White House+2The White House+2

   • These cuts are most salient for uninsured and under-insured patients, and for those whose plans don’t cover certain drugs (e.g., obesity therapies).

With ≈95% confidence, we can say:

• Selected drug prices for certain payers and channels are being cut by 60–90% from U.S. list price, but this is not a across-the-board reduction for all drugs and all patients.

• The clearest winners in the short term are Medicaid enrollees and cash-pay / uninsured users of specific high-cost drugs.

2.3 Trade-offs and exemptions

In exchange for these concessions, drugmakers receive:Reuters+2Barron’s+2

• Three-year exemptions from sector-specific tariffs.

• A relatively stable regulatory environment, avoiding harsher statutory price controls.

• Continued ability to set higher prices in commercial insurance markets, where PBMs, rebates, and formularies still dominate.

Analysts note the deals may have limited impact on industry profitability while providing substantial political value to the administration.Barron’s+1

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3. Implications for Patients, Payers, and the Economy

3.1 Patients and households

Who benefits most?

• Medicaid patients – Access to MFN prices on a wide range of drugs, including Eliquis donations and cheaper GLP-1s, should materially reduce state program spending and patient cost-sharing.The White House

• Uninsured and self-pay patients – TrumpRx discounts are transformative for people who previously paid list price or skipped treatment due to cost. For some, the difference is literally thousands of dollars per month.The White House+2The White House+2

• Medicare beneficiaries – Benefit primarily through IRA-negotiated prices and the Part D redesign; MFN deals on GLP-1s and insulins reinforce and accelerate these gains.KFF+2Reuters+2

Equity perspective (≈90% confidence):

• The focus on chronic conditions—diabetes, obesity, cardiovascular disease, COPD, hepatitis—aligns with conditions heavily concentrated among low-income and minority populations, so the potential for equity gains is substantial.The White House+1

• But access to TrumpRx (digital literacy, internet access, navigation support) will be uneven. Without outreach and navigator programs, some vulnerable patients may not realize or capture these new discounts.

3.2 Public budgets (Medicare, Medicaid, state finances)

• Medicare: IRA-driven savings of $6B/year plus $1.5B/year in patient OOP savings are reasonably well-documented; Trump’s posture is to embrace and steer these negotiations, not dismantle them.Centers for Medicare & Medicaid Services+1

• Medicaid: The MFN deals promise “billions” in savings, and given the scale of drugs like GLP-1s, insulin, and widely used respiratory and cardiovascular therapies, that order of magnitude is plausible. We lack formal scoring, but a high-single-digit billions estimate over several years is a reasonable working hypothesis (~80–90% confidence).The White House+1

• States: Lower Medicaid drug spending eases pressure on state budgets, but states may face administrative costs to integrate TrumpRx, update formularies, and manage new utilization patterns (e.g., more patients starting GLP-1s).

3.3 Pharmaceutical industry, innovation, and investment

Industry impact:

• Short-term stock market response is broadly positive: the deals defuse the threat of harsher price controls and trade penalties while keeping overall profitability high.Barron’s+1

• Companies commit to at least $150 billion in U.S. manufacturing and R&D investment and to donating API stockpiles to SAPIR, supporting domestic supply-chain resilience.The White House+1

Innovation incentives: (≈80–90% confidence)

• By working to fix the IRA “pill penalty”, the administration is attempting to rebalance incentives between small molecules and biologics. This is broadly supportive of innovation in lower-cost, mass-market therapies.Sidley Austin+1

• On the other hand, MFN and price-cut expectations on profitable chronic-disease drugs could squeeze margins in certain segments, potentially affecting investment decisions, especially for follow-on drugs where price competition is fiercest.

Net: The innovation story is mixed but not catastrophic; if anything, the biggest risk is politicization and uncertainty, not pure revenue loss.

3.4 Market structure and PBMs

TrumpRx’s DTC model plus MFN deals clearly weaken the relative power of PBMs, whose business model depends on managing formularies and negotiating rebates in opaque ways.Barron’s+1

With ≈90% confidence, we can expect:

• Some migration of cash-pay and high-deductible users to TrumpRx, bypassing PBMs.

• Pressure on PBMs to improve transparency and pass through savings, particularly if TrumpRx prices become a widely publicized benchmark.

• Potential for adverse selection: PBMs may concentrate on lower-risk, lower-cost users, while TrumpRx absorbs sicker, higher-cost patients seeking steep discounts.

3.5 International pricing and diplomacy

MFN is explicitly framed as ending “global freeloading”: foreign countries can no longer pay far less for the same drugs while U.S. patients subsidize global profits.The White House+1

Likely consequences:

• Upward pressure on prices in some foreign markets, as companies raise overseas prices rather than slash U.S. prices too far. (~70–80% confidence, based on prior global reference pricing experience).

• Strains in trade and health diplomacy, particularly with allies whose budgets are sensitive to drug-price increases and who may see U.S. policy as exporting costs.