President Trump’s bold new plan to slash prescription drug prices is drawing fire from one of the nation’s most prominent legal and economic scholars. University of Chicago law professor Richard Epstein criticized the executive order—which would impose a “most favored nation” (MFN) pricing rule on pharmaceuticals sold in the U.S.—as deeply flawed and likely to backfire.
The executive order, unveiled during a press conference flanked by RFK Jr. and other advisors, aims to reduce drug prices in the U.S. by mandating that Americans pay no more than the lowest price charged for the same drugs anywhere in the world. Trump claimed this would produce savings of “30 to 80 percent” on many medications and restore “fairness” to American consumers.
But Epstein, speaking on Chicago’s Morning Answer, said the plan reveals a fundamental misunderstanding of how pharmaceutical markets work.
“Trump is an ignorant man on this issue,” said Epstein. “He’s overconfident, and what he’s doing is playing with fire without realizing it.”
Marginal Costs and Misguided Policy
According to Epstein, the MFN policy ignores basic economic realities—namely, the enormous cost of developing new drugs. The first pill of a breakthrough treatment can cost upwards of $2.5 billion in R&D and regulatory expenses. The last pill may cost just 25 cents to manufacture. Pricing drugs based only on marginal cost, as price control advocates suggest, means the initial development cost is never recouped—making innovation unsustainable.
“If you only pay 25 cents for the last pill,” Epstein explained, “you’ll never get the first pill.”
A Recipe for Reduced Access and Slower Innovation
Rather than reducing prices in the U.S., Epstein predicts pharmaceutical companies will withdraw products from foreign markets to avoid lowering their U.S. prices, depriving patients in poorer countries of life-saving drugs.
“Many more deaths will occur in those places,” he warned, “and the companies will lose the incentive to innovate.”
He also emphasized the delay and inefficiency baked into foreign price-controlled systems, noting that patients overseas often wait months or years longer than Americans for access to new therapies.
“The U.S. pays more, but it gets the drugs faster,” Epstein said. “Foreign governments play monopsony buyer and drive prices down, but that means slower access.”
Quality and Safety at Risk
Trump’s anecdote about a friend buying a popular weight loss drug for $88 in London versus $1,300 in New York illustrates price disparities—but not quality differences. Epstein cautioned that importing drugs from abroad, as some have suggested, introduces real dangers.
“There are serious risks of contamination and fraud in these supply chains,” he said, citing past warnings from pharmaceutical firms and regulatory challenges. “If the Canadian government says they won’t inspect drugs shipped to the U.S., we’re flying blind.”
Fix the FDA, Don’t Break the System
Instead of price controls, Epstein called for reforming the FDA to reduce the time and cost of drug approval. He said prolonged review timelines dramatically inflate development costs and recommended a shift toward faster approvals paired with strong post-market monitoring.
“We need to address the bottlenecks in drug development,” he said. “Shorten the delays, reduce the interest costs on capital, and you’ll see prices come down without compromising innovation.”
No Difference Between Biden and Trump on This
Perhaps most damningly, Epstein argued that Trump’s populist instincts on drug pricing now mirror those of the Biden administration.
“There’s no difference between a dumb Joseph Biden and a dumb Donald Trump when it comes to these policies,” he said. “They’re both supporting ideas that will dismantle one of the last bastions of American innovation.”
A Complex Market Oversimplified
The complexity of the pharmaceutical pricing system—rebates, insurance, pharmacy benefit managers, generics, and more—makes sweeping mandates like MFN especially risky. Epstein warned that such one-size-fits-all rules ignore the realities of market segmentation and risk creating drug shortages, higher costs, and less innovation for everyone.
“The president thinks he’s fixing the system,” Epstein said. “What he’s really doing is destroying the delicate pricing mechanisms that make drug development possible.”
As the pharmaceutical industry digests the news, early market reaction remains muted—possibly due to uncertainty over whether and how the order will be implemented. Still, experts like Epstein caution that the stakes are high.
“Drug innovation doesn’t just happen,” he concluded. “We built a system that works—imperfectly, yes—but it works. Destroying it out of ignorance would be a tragic mistake.”
For more in-depth analysis of health care policy and economics, follow Professor Richard Epstein’s work through the University of Chicago and the Hoover Institution.