US President Donald Trump speaks to the media prior to departing from the South Lawn of the White House in Washington, DC, July 5, 2019.

President Donald Trump said Friday he's preparing an executive order declaring a "favored nations clause" for drug prices, where the U.S. will pay no more than the country with the lowest prescription drug prices.

"As you know for years and years other nations pay less for drugs than we do," Trump told reporters on the South Lawn of the White House. "We're working on a favored nations clause, where we pay whatever the lowest nation's price is. Why should other nations — like Canada — why should other nations pay less than us?"

The SPDR S&P Pharmaceuticals ETF, which tracks the pharma industry's biggest companies, was down 1.4% after Trump's announcement.

The Trump administration and Democrats in Congress are both trying to bring more transparency to drug prices and, ultimately, lower costs for consumers.