U.S. President Donald Trump has signed an executive order to reduce the high price of prescription drugs, but its details and long-term impact are far from clear.

Trump cited patients in other countries to pay much lower than Americans pay, and Trump said he would order pharmaceutical companies to lower prices in the U.S.

He touted the move as one of the most important execution orders in U.S. history, claiming that prices will drop almost immediately, "30% to 80%.

But experts are highly skeptical of these claims, and the shift in the stock market shows that investors don’t think they will have an immediate impact.

The United States has an especially complex health care system – including large private insurance industries, employer subsidies, and publicly funded insurance programs for the elderly and the poor (called Medicare and Medicaid, respectively).

In many other developed countries, a more centralized system means officials can negotiate drug coverage and, in some cases, refuse to buy if they think the price is too high.

In 2021, the U.S. Government Accounting Office compared it with Australia, Canada and France and found that prescription drugs are two to four times more expensive in the United States.

Politicians from both American parties are targeting costs. In a White House announcement Monday, Health Secretary Robert F Kennedy JR pointed out that price has been a focus of Democrats and a major goal of the presidential campaign of Socialist Senator Bernie Sanders.

Trump has tried to address this issue during his first term and former President Joe Biden, especially the cost of life-saving drugs such as insulin, but the U.S. prices are still stubbornly high.

Trump and his health officials spoke at the White House on Monday, accusing drug lobbying of lack of progress and making substantial donations to members of Congress.

"The drug hall is the most powerful hall," Trump told reporters. "But from today, the United States will no longer subsidize foreign health care, and that's what we are doing."

It should also be noted that Trump's trade tariffs (which he has been using to threaten other countries) may further raise costs. Trump has previously said he would impose taxes on imports to the United States.

Trump's orders are much bigger than previous efforts to reduce costs - but many details are yet to be resolved.

The wording directs U.S. officials to ensure that drug cost transactions conducted in foreign countries do not lead to “unreasonable or discriminatory” prices for Americans.

But it is unclear what exactly these terms cover - what measures will the White House take if "unreasonable" practices are found.

The White House also wants pharmaceutical companies to sell more products directly to consumers — cut insurance companies and drug benefits managers — and look at foreign imported drugs sold at lower prices. The idea has been stumbling on security and trade rules before.

Monday's order was the beginning of negotiations between the U.S. Department of Health and Human Services (HHS) and the industry, an official said.

The order also proposes to gain the U.S. status as the most popular country (MFN) - meaning that pharmaceutical companies will be required to match the lowest price abroad when sold to U.S. consumers.

"Big pharmaceutical companies either voluntarily abide by this principle, or we will use the power of the federal government to ensure that we are at the same price as other countries," Trump told reporters.

It is unclear which mechanism the White House will use to punish pharmaceutical companies that refuse to voluntarily comply.

Alan Sager, a professor of health policy at Boston University, said the prices of drugs are very opaque. He told the BBC that drug manufacturers could easily say that they are following the order to promote the regular price discounts they have already offered at very high retail prices.

Professor Sager said: "Will they take action? Maybe. Will they claim to act? Sure."

“Whether this would indicate a lasting and meaningful cut in U.S. drug prices is unclear,” he said. “It’s speech, not reality.”

Trump's preview of the announcement reached the share prices of major drugmakers, such as Pfizer, Eli Lilly and the UK's G7.

But they underwent a quick recovery, rallying after the government shared the scope of the plan - a sign that investors did not expect the move to have a significant impact.

To retain its profits in the U.S., drug companies can simply sell their products from other countries, said researchers Darius Lakdawalla and Dana Goldman of the University of Southern California.

The researchers also said foreign governments often underestimate the true value of drugs to patients and that “the European pricing model that shifts to the United States will lead to shorter, healthier lives for Americans.”

Meanwhile, it is unclear how prescription drug prices fit Kennedy’s “Make America Healthy Again” agenda. The health secretary has always stressed that diet and exercise are key to improving American health and criticized the spread of many drugs, including vaccines and drugs for the treatment of mental illness.

However, any potential drug price reduction could be popular among Americans - because polls have always shown that high costs are the most important issue when it comes to the U.S. health care system.

C Michael White, a professor of pharmacy at the University of Connecticut, said the outcome of the Trump administration’s actions on drug prices is “the smallest for many Americans,” but any attempt to achieve higher transparency and lower costs is a positive step in the right direction.

But the order is expected to face challenges from the court and Congress in the pharmaceutical industry.

Industry groups are largely opposed to executive orders and say it will be counterproductive — potentially killing the supply of drugs and funds for research, while almost no high cost.

"Importing foreign prices from socialist countries will be a bad deal for American patients," Stephen J UBL, president of U.S. drug research and U.S. manufacturers, said in a statement.

John F Crowley, president of the Biotech Innovation Organization, called MFN’s identity a “deep flawed proposal that could destroy small and medium-sized biotech companies in our country by stifling research funds.

“Patients and families are not bargaining chips in the trade war, but that’s exactly how they are treated – first by proposing tariffs on our country’s medicines, now with foreign reference pricing in the name of fairness.”

But Boston University professor Alan Sager is skeptical of the industry's arguments. He noted that the funds used for research drugs were already spent before any profit was made, and suggested that there might be other ways to fund research – for example, large cash prizes for treatments for specific diseases.

Professor Sager suggested that practical actions to lower the price of drugs would depend on the president's attention range.

“Given the obvious role of the president in public on many topics, it is unclear whether he will stay on this issue or that he will be willing and able to act effectively,” he said.

With reports from Natalie Sherman in New York