America subsidizes pharmaceuticals across the world while spending more than double the average of other developed countries on prescription drugs.

Does today's executive order finally end the Pharmaceutical reign of terror?

Lawmakers serve Big Pharma, not you

Once you accept the dictum that money buys influence and influence is control, then you accept without incredulity that Big Pharma controls American politics. The data showing this has been out in the open forever and the facts are nothing short of startling:

A 2020 STAT analysis found that more than two-thirds of Congress received a check from pharmaceutical companies that year. Recent data from Open Secrets confirms that a large majority of leaders serving in the U.S. Congress and Senate receive significant contributions from pharmaceutical or health products companies, averaging $45,000 and $47,000 for Republicans and Democrats in the House of Representatives, respectively — and $50,000 and $69,000 for Republicans and Democrats in the Senate.

That totals $26.4 million to Democrats and $16.1 million to Republicans in 2023-2024 from pharmaceutical and health product companies, with Democrats receiving noticeably more. Vice President Kamala Harris received nearly six times more funding support from pharmaceutical companies the last election cycle, compared to President Donald Trump.

Breaking down the numbers individually, at least 72 of the 100 sitting U.S. senators last year received at least $10,000 from employees or PACs associated with pharmaceutical/health product companies in the 2024 election cycle, with 12 senators receiving more than $100,000.

Feel free to click on this image to be taken to the interactive tool that allows you to view lawmaker by state and what pharmaceutical company funds them.

Why is the cost of medications so damn high?

The exorbitant prices that Americans pay for drugs relative to other countries are due to government policies that effectively subsidize other countries’ medications.

​A 2015 Reuters analysis found U.S. prices for the 20 top-selling drugs were triple those in Britain, making America “by far the most profitable market” for pharmaceutical companies and “leading to complaints that Americans are effectively subsidizing health systems elsewhere.”​

Here’s are comparison infographics showing you the staggering price differences between the same drugs across different developed nations.

In other words, U.S. drug pricing has become a de facto global subsidy, with American wallets funding discounts abroad

The U.S. healthcare market subsidizes much of the world’s cutting-edge medical innovations, including a disproportionate amount of pharmaceutical developments. This allows socialized healthcare systems of other countries to remain sustainable while their governments and taxpayers pay significantly less than they otherwise would for the same drugs consumed by Americans. This system also allows other countries to access drugs that likely wouldn’t exist if it weren’t for American-funded innovation. This status quo has helped make the U.S. a global leader in pharmaceutical development and innovation. Remember this statistic the next time you hear someone gush about how cheap some medication in some country with socialized medicine is.

The Centers for Medicare & Medicaid Services (CMS) in the U.S. is prohibited from negotiating prices directly with drug companies (the Inflation Reduction Act, which doesn’t take effect till 2026, allows negotiations for a very small number of drugs, most of which are either off patent, or will be when it takes effect). In most cases, Medicaid is legally required to pay the lowest price, Medicare Part B is required to pay the average sales price borne by the private market, and Medicare Part D subsidizes highly regulated private insurers to cover various prescription drugs. Federal prices are generally based on prices paid by nonfederal purchasers such as private health insurers.

Since CMS is not allowed to negotiate down drug prices and instead pays prices pegged to what the American private market pays, pharmaceutical manufacturers have an incentive to raise the prices charged in the private market, even if this would result in fewer drugs being purchased in the private market and less profit from the private market for the manufacturers as a result.

Now compare and contrast this to more socialized medical systems like the one in Australia, where private insurers purchase drugs through market-based price negotiations and government programs purchase drugs from manufacturers in bulk and negotiate lower prices. Public insurers often consider a range of market pricing data during negotiations to ensure the cost-effectiveness of their purchases, but there typically isn’t a rigid pricing formula that pharmaceutical companies can game.

As Charles Rotter explains: Pharmaceutical manufacturers prioritize high prices in the U.S. while accepting steep discounts in secondary markets like Canada and Europe. Other governments leverage bulk purchasing and price controls to negotiate dramatically lower rates than what Americans are charged. For example, Canada directly regulates drug prices​ and most European countries have government-run health systems that bargain hard with drugmakers. Because the U.S. largely leaves pricing to the market, companies can charge whatever the traffic will bear – and they do. The result is a staggering price gap: U.S. prescription drug prices average about 2.78 times higher than those in 33 other nations (and over 4 times higher for brand-name drugs)​.

Trump’s Executive Order

On 12th, May, 2025—shortly after completing 100 days into his second term—president Trump signed an executive order to reduce drug prices. It marks an expansion of the "most favored nation" idea from his first term, when the Centers for Medicare and Medicaid Services set steep price caps tied to the prices charged in other developed countries for how much it would pay for some prescription drugs.

Under the new version of Mr. Trump's "most favored nation" proposal, the White House says it will seek to develop new rules to revive the price caps in Medicare, in addition to a new "mechanism" to allow Americans to buy drugs directly from manufacturers at this price.

Over the next month, CMS Administrator Dr. Mehmet Oz said the administration is planning to approach "pharmaceutical companies to talk specifically about what we want the most favored nation price to be, based on the best data we have."

The order also takes aim at pharmacy benefit managers, the so-called middlemen between manufacturers and insurers, whom Trump has castigated in the past. It calls for HHS to establish a way for patients to buy their drugs directly from manufacturers, bypassing these middlemen.

The only important question is: “will it work?”

We won’t know the answer till this executive order is challenged in court, which, if past is prologue, will almost certainly happen.

Surprisingly, drugmakers did not seem rattled by the announcement, with their stock prices generally up in the early afternoon. The Pharmaceutical Research and Manufacturers of America, the industry’s main trade association, praised Trump for coming down hard on other countries.

“The Administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines. U.S. patients should not foot the bill for global innovation,” Stephen Ubl, PhRMA’s CEO, said in a statement.

This gives one cause for cautious optimism, of course with the caveat that unless proven otherwise, every policy coming out of DC is either showboating, an optical illusion, or even worse—will result in the exact opposite of its stated purpose.