WASHINGTON (AP) — President Donald Trump on Monday enacted a broad executive order giving pharmaceutical companies a 30-day timeframe to voluntarily decrease the price of prescription medications in the U.S., or face forthcoming constraints on government expenditure for those drugs.

The order tells the health department, led by Robert F. Kennedy Jr., to negotiate new prices for drugs in the next month. If they can't make deals, Kennedy will have to create a new rule that connects the price the U.S. pays for medicines to the lower prices paid by other countries.

“We will achieve parity,” Trump stated during a press conference held on Monday morning. “Everyone will contribute equally. We will pay the same rates as Europe.”

It's not clear how the Republican president's order will affect the many Americans with private health insurance. The government has the most power to decide the price it pays for medicines covered by Medicare and Medicaid.

Trump's proposed new drug price savings, which remain uncertain, came only hours after the Republican-controlled House unveiled its plan to cut $880 billion from Medicaid.

The nation's pharmaceutical lobby, representing leading U.S. drug manufacturers, swiftly opposed Trump's directive, deeming it a "detrimental arrangement" for American patients. Pharmaceutical companies have consistently contended that any jeopardy to their profitability could impede their research and development efforts aimed at pioneering novel medications.

Stephen J. Ubl, the head of PhRMA, said that using prices from other countries would be bad for American patients and workers. He explained that this would mean fewer treatments and cures and could risk the large investments his companies plan to make in America.

Trump's "most favoured nation" approach to Medicare drug pricing has been a subject of contention since its initial proposal during his first term. He enacted a comparable executive order towards the end of his presidency, mandating that the US should only procure certain drugs administered in clinical settings, like injectables or cancer treatments via infusion, at the reduced price paid by other nations.

That specific executive order encountered obstacles, as a court order prevented the regulation from being implemented during President Joe Biden's term. The pharmaceutical sector contended that Trump's 2020 effort would grant foreign administrations an advantage in determining the cost of medications in the United States.

During an extensive speech at the White House on Monday, Trump consistently advocated for pharmaceutical companies, arguing that other nations were responsible for the exorbitant cost of medication for Americans. Flanking the president were Kennedy, Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, Dr. Marty Makary, commissioner of the Food and Drug Administration, and Jay Bhattacharya, director of the National Institutes of Health.

He nonetheless threatened the companies with federal inquiries into their practices and the liberalisation of the U.S. drug market to facilitate the importation of more medicines from other countries.

“Pharmaceutical corporations primarily derive their profits from the United States,” Trump asserted. “That situation is far from ideal.”

Over the weekend, Trump emphasised the significance of the announcement, claiming in one post that his plan had the potential to save "TRILLIONS OF DOLLARS."

However, on Monday, the White House provided no concrete details regarding the potential financial savings the administration envisages.

The health department's senior officials are scheduled to convene with pharmaceutical executives over the next month to propose revised drug prices informed by international benchmarks, Oz announced on Monday.

According to Rachel Sachs, a health law expert at Washington University, Americans are improbable to witness a swift reduction in escalating drug costs due to the directive.

"It appears the strategy is to request that manufacturers voluntarily decrease their prices to an undisclosed level," Sachs stated, adding, "Should they fail to reduce their prices to the intended point, HHS will pursue alternative measures with an extended timeframe, some of which might, over several years, lead to lower drug costs."

The health department has a lot of power to change the prices of drugs covered by Medicare and Medicaid because it can make rules. However, this power is limited. In 2022, Congress passed a new law that lets Medicare negotiate the price it pays for a small number of prescription drugs starting in 2026. Before this law, Medicare paid whatever the drug companies asked for. Drug companies tried to sue to stop the law, but they were not successful.

Regulating the cost of medication for millions of privately insured Americans presents an even greater challenge for the agency.

The United States regularly spends much more on medicine prices than other big, rich countries. This problem has made both main political parties angry for a long time, but a permanent solution has never passed through Congress.

When Trump started his first term, he strongly criticized drug companies, saying they were making too much money unfairly. He also said that countries where the government controls drug prices were taking advantage of Americans.

Before the announcement, Trump again used strong words against the industry on social media, saying that drug companies had claimed for years that high prices were due to research costs, and that these costs were unfairly paid only by Americans.

Speaking about the strong efforts of drug companies to influence politicians, he stated that money given to campaigns "can do a lot, but not with me, and not with the Republican Party."

He articulated a commitment to upholding ethical principles.

Several pharmaceutical corporations experienced an upward trend in the stock market on Monday morning, with significant gains observed across the sector.