May 12 (Reuters) - U.S. President Donald Trump signed a

broad executive order on Monday directing drugmakers to lower

the prices of their prescription drugs to align with what other

countries pay.

White House officials said the government will give

drugmakers price targets in the next month, and will take

further action within six months if the companies do not make

"significant progress" toward the goal of lower prices.

Here is what you need to know:

WHAT IS TRUMP'S STANCE ON PRESCRIPTION DRUG PRICES?

Trump has sharply criticised the pharmaceutical industry for

years over the price of medicines in the United States. He has

also chided other wealthy nations for "freeloading" on U.S.

pharmaceutical innovation.

During his first term, in 2017, he accused the industry of

"getting away with murder" in the prices they charge the

government for prescription drugs.

Trump's proposed international reference pricing program was

blocked by a court in 2020.

During his 2024 presidential campaign, Trump said Americans

were being overcharged for medicines compared to other nations

and pledged to take action.

On Monday, he said he wants to "equalize" prices with other

countries by implementing tariffs.

ARE U.S. DRUG PRICES MORE EXPENSIVE?

Yes. The U.S. pays the most for prescription medicines in

the world, often nearly three times that of other developed

nations.

Top-selling blood thinner Eliquis from Bristol Myers Squibb ( BMY )

and Pfizer ( PFE ) carries a U.S. list price of $606 for

a month's supply. The previous administration of Democratic

President Joe Biden negotiated that down to $295 for Medicare,

which goes into effect in 2026, but the drug costs $114 in

Sweden and just $20 in Japan.

WHAT IS TRUMP GOING TO DO ABOUT IT?

Since taking office in January, Trump has reiterated that he

wants to end this inequity. On Sunday, he announced on Truth

Social that he would sign an executive order to pursue "most

favoured nation" pricing.

Also known as international reference pricing, it seeks to

narrow the gap between the U.S. and foreign drug prices. Reuters

reported in April such a policy was under consideration.

The executive order on Monday differed from what drugmakers

had been expecting. Lobbyist sources had told Reuters ahead of

the order's signing on Monday that they expected the "most

favored nation" pricing to apply to drugs for Medicare patients.

But the order appeared to apply to all medicines.

Separately, Trump has also pushed for drugmakers to boost U.S.

manufacturing. His administration is conducting an investigation

into imports of pharmaceuticals in a bid to levy tariffs on

grounds that reliance on foreign production of medicine

threatens national security.

HOW DOES THIS DIFFER FROM PREVIOUS PRICE REDUCTION EFFORTS?

Biden's Inflation Reduction Act allows the government to

negotiate the price of its most expensive drugs within Medicare.

The prices for the first 10 prescription drugs it negotiated

were still on average more than double, and in some cases five

times, what drugmakers had agreed to in four other high-income

countries, Reuters previously reported.

WHAT IS THE PHARMA INDUSTRY'S RESPONSE?

The industry is strongly opposed to the prospect of

dramatically lower drug prices in the United States, the world's

largest pharmaceuticals market.

Two industry sources told Reuters last month that any such

policy was more concerning to the industry than other potential

government moves such as tariffs on imported medicines.

The main U.S. lobby group for drugmakers, the Pharmaceutical

Research and Manufacturers of America, known as PhRMA, said, "to

lower costs for Americans, we need to address the real reasons

U.S. prices are higher: foreign countries not paying their fair

share and middlemen driving up prices for U.S. patients."

"Most favored nation is a deeply flawed proposal that would

devastate our nation's small- and mid-size biotech companies,"

said John Crowley, CEO of BIO, the main U.S. trade group for

biotechnology companies, in a statement.

WHAT ARE THE CHALLENGES IN CARRYING OUT THE ORDER?

Experts warn that referencing prices from other countries is

complex, as many drugs sold in the U.S. are not available

abroad, and some nations do not publish what they pay for drugs

or take years to negotiate prices.

The U.S. does not buy drugs directly for a national health

system, as countries such as England and Germany do, instead

relying on the private sector to manage drug price negotiations

for both government and private health plans.

Analysts said implementing the broad order would be

difficult.

The executive order is also likely to face legal challenges,

particularly for exceeding limits set by U.S. law, including on

imports of drugs from abroad, legal experts said.