What Trump’s Drug Pricing Executive Order Means for Employers

A new executive order (EO) that aims to curb soaring prescription drug prices, including for popular weight loss drugs known as GLP-1s, could potentially result in savings for employer health plans. However, experts said employers shouldn’t take their foot off the gas when it comes to trying to curb costs on their own.

President Donald Trump on May 12 issued an EO directing drugmakers to lower the prices of their medicines to align to the prices charged in other wealthy countries.  

The order sets price targets for drugmakers to implement within 30 days and warns of additional measures to reduce prices if they fail to demonstrate “significant progress” toward these goals within six months of the order being signed. Trump promised prices would drop by 30% to 80% “almost immediately.”  

“Everybody should pay the same price,” Trump said during a signing event at the White House.

This isn’t the first time Trump has tried to cut prescription drug costs. During his first term as president, he tried to curb prescription prices under Medicare, but that policy was blocked by the courts. 

“The language of the executive order is a bit vague, so it’s too early to know how the order might potentially impact the market,” said Nick Conway, president of Rx solutions at NFP, a global benefits consultant and property and casualty insurance broker in Chesterfield, Mo. “High-level, it will be interesting to see how the pharmaceutical manufacturers respond and coordinate to the order, and it could actually increase drug prices in other parts of the world.”

The EO has the potential to impact employers and their health plans if price reductions extend into the commercial market.  

“If adopted in the commercial payor space, adoption of a pricing model as proposed by the executive order could provide significant savings to employers’ health plans,” said Seth Friedman, pharmacy and health plans practice leader at Gallagher. “The price delta between some products in the United States versus other nations is significant.”

That could offer some relief from high prescription drug costs — a recurring pain point for organizations.  

Spending on prescription drugs remains the fastest-growing component of health benefit costs, according to data from Mercer. Drug benefit costs per employee rose 7.2% in 2024, and the ongoing introduction of very high-cost gene and cellular therapies is also adding to these higher costs, employers reported. 

“Any unit price improvement will be a breath of fresh air for plan sponsors that have seen their pharmacy costs rise significantly over the years,” Friedman said. 

A Focus on GLP-1 Drugs

In particular, the new EO would likely target the soaring cost of GLP-1 drugs (glucagon-like peptide-1 receptor agonists), as Trump specifically called out the popular weight loss drugs during his announcement.  

GLP-1s were originally used to treat type 2 diabetes but have become a major focus for employers over the past couple of years, with a significant number of employees turning to Wegovy, Zepbound, and other versions to shed pounds and reduce health risks. The high cost of the drugs — the brand-name injectable drugs typically cost between $1,000 and $1,500 a month for consumers, while employers may foot 70% to 100% of the bill — have caused employers to hesitate when deciding whether to cover them.

Nearly all employers (96%) said they are concerned about the ongoing cost implications of GLP-1s, according to a 2024 survey by the Business Group on Health. 

Meanwhile, GLP-1s are driving a historic rise in traditional drug spending, helping it outpace specialty drug spending for the first time. The annual growth rate of spending for traditional drugs — medications used to treat common health problems such as infections, high cholesterol, and diabetes — soared from 2.1% in 2021 to 12.8% in 2024, according to recent data from Evernorth, the health services division of insurer Cigna.  

By contrast, the annual growth rate for spending on specialty drugs — high-cost, complex medications typically used to treat chronic conditions — has slowed over the past few years, declining from 9.2% in 2020 to 5% in 2021 and 4.9% in 2024. Traditional drug spending surpassed specialty drug spending in 2023 after a dramatic rise between 2022 and 2023, according to Evernorth’s report — driven by the demand for and usage of GLP-1s.

“We are seeing these drugs skyrocket from a cost perspective,” Friedman said. “So, we see employers say, ‘We have to address this.’ ” 

Regardless of how Trump’s EO could impact employer health care costs, experts said employers will — and should — continue to focus on their health care cost approaches.

For GLP-1 drug costs, many employers have turned to utilization management strategies, including prior authorization, or put in place other restrictions such as a certain body mass index threshold or documentation from a doctor about risk factors, patient history, or dieting history. Others are looking at plan designs that take advantage of direct contracted price options from the manufacturer or partner with a pharmacy benefits manager. 

“The current market dynamics, plus the increased cost of prescription medications, have most employers concentrating on what they can do,” Conway said.

He also noted it’s important for organizations to stay “well informed, flexible, and prepared to move fast to take advantage of or limit risks associated with these changes” from Trump’s EO.