WASHINGTON (AP) — On Monday, President Donald Trump enacted a broad executive order giving pharmaceutical companies 30 days to voluntarily reduce the price of prescription drugs in the U.S., or potentially face new restrictions later on regarding government payment limits.

The directive mandates the health department, under the leadership of Robert F. Kennedy Jr., to negotiate revised drug prices within the next month. Should no agreement be achieved, Kennedy will be assigned the responsibility of formulating a regulation that links the cost of medications in the U.S. to the reduced prices observed in other nations.

During a press conference on Monday morning, Trump stated that they would "equalize," meaning everyone would pay the same amount as paid in Europe.

The potential effects of the Republican president's executive order on the millions of Americans with private health insurance remain ambiguous. The federal government holds considerable leverage in determining the costs of drugs covered by Medicare and Medicaid.

Just hours after the Republican-controlled House shared its plan to cut $880 billion from Medicaid, Trump announced his plan for new, but not guaranteed, savings on drug prices.

The national pharmaceutical lobby, representing major U.S. drug manufacturers, promptly opposed Trump's directive, characterizing it as detrimental for American patients. Drug producers have consistently maintained that any perceived threats to their profitability could hinder their research into novel therapies.

Stephen J. Ubl, who is the president and CEO of PhRMA, said that bringing in prices from other countries, especially socialist ones, would be bad for American patients and workers. He explained that this would mean fewer treatments and cures are available and would put at risk the large amount of money their member companies plan to invest in America.

The controversial “most favored nation” strategy proposed by Trump for determining Medicare drug prices has been a subject of contention since its initial attempt at implementation during his first term. In the concluding weeks of his presidency, he signed a comparable executive order mandating that the U.S. pay a reduced price for certain medications, specifically injectable or infusion-administered cancer drugs utilized in a clinical setting, mirroring the lower costs procured by other nations.

That limited executive order faced problems, including a court decision that stopped the rule from starting under President Joe Biden. The drug companies said that Trump's 2020 plan would give foreign governments an advantage in deciding how much medicines cost in the U.S.

During a comprehensive address at the White House on Monday, Trump consistently supported pharmaceutical companies, attributing the elevated cost of medications for Americans to other nations.

However, he did issue a threat to the companies, indicating potential federal investigations into their methods and the possibility of liberalising the U.S. pharmaceutical market to facilitate the import of more medications from abroad.

“Pharmaceutical companies derive the majority of their profits from the American market,” Trump stated, deeming this situation undesirable.

Over the weekend, Trump highlighted the announcement, claiming in a post that his plan could save "TRILLIONS OF DOLLARS."

However, on Monday, the White House remained vague regarding the exact amount of savings the administration expects to achieve.

According to Oz on Monday, senior officials from the health department are scheduled to convene with pharmaceutical company executives within the next month to propose revised drug pricing, benchmarked against international rates.

Americans probably won't see lower drug prices soon because of the order, according to Rachel Sachs, an expert in health law at Washington University.

Sachs suggested the plan appears to involve requesting manufacturers to voluntarily reduce their prices to an undefined level. He added that should they fail to lower their prices to the target point, HHS will pursue alternative measures with a protracted timeline, some of which might eventually lead to reduced drug prices several years from now.

The health department has the main power to change the prices of drugs covered by Medicare and Medicaid because it can make rules. However, the department's power to do this 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. Drug companies sued to stop the law, but they lost.

The agency finds it even more challenging to influence the cost of drugs for the millions of Americans covered by private insurance.

The United States consistently spends more on pharmaceutical prices than other large, affluent nations, an issue that has repeatedly provoked the indignation of both primary political factions, yet a permanent resolution has never been successfully passed by Congress.

When he started his first term, Trump said pharmaceutical companies were "getting away with murder." He also complained that countries where governments set drug prices were taking advantage of Americans.

Before the announcement, Trump strongly criticized the industry on social media, saying that "Pharmaceutical/Drug Companies have said for years that the costs of Research and Development, and all these costs, would be paid only by the 'suckers' of America, for no reason at all."

Talking 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."

"We are resolved to act justly," he wrote.

Several pharmaceutical companies experienced significant growth in the stock market on Monday morning, with Merck, a firm that generated $64.2 billion last year largely thanks to its cancer therapy Keytruda, seeing a 3.9% increase, while pharmaceutical powerhouse Pfizer, which recorded $63.6 billion in revenue in 2024, advanced by 2.5%, and Gilead Sciences climbed 5.8%.