Trump wants drug companies to lower prices in the US
President Donald Trump intensified his efforts to compel pharmaceutical companies to reduce drug prices, dispatching letters to 17 of the largest drug manufacturers globally, insisting they align US pricing with that of other nations for new medications. In the correspondence directed to Eli Lilly & Co., Novo Nordisk A/S, Pfizer Inc., and other entities, Trump urged these companies to promptly reduce their pricing for Medicaid concerning current pharmaceuticals. He also requested assurances that future medicines would be introduced and maintained at prices comparable to those available internationally. Trump provided the companies with a 60-day window for voluntary compliance, cautioning that he would “deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices” should they fail to do so.
The Standard and Poor’s 500 Pharmaceuticals Index experienced a decline of 2.7 percent, primarily driven by decreases in the stock prices of Merck & Co. and Bristol-Myers Squibb Co. Lilly shares declined by 2.6 percent in New York trading, whereas AbbVie Inc., another company addressed in Trump’s letter, reduced its earlier gains. The pharmaceutical sector has consistently argued that the concept of globally linked drug prices poses a significant risk to the longstanding supremacy of the United States in biomedical research, undermining the motivation to develop new therapies and hindering patient access to essential medications. Executives have called on the administration to redirect its focus towards the intermediaries within the pharmaceutical supply chain, who are responsible for negotiating prices on behalf of employers.
Following Trump’s recent demands, various companies released statements highlighting their readiness to collaborate with the administration on issues of access and affordability. The largest trade group in the industry, however, adopted a more assertive position regarding the proposed changes. “Importing foreign price controls would undermine American leadership, hurting patients and workers,” stated Alex Schriver, a representative for PhRMA. He reiterated calls to regulate pharmacy benefit intermediaries and address the issue of foreign nations neglecting their obligations, while also highlighting the potential risk of ceding ground to China, a matter of significant concern for Trump. “At a time when China is threatening to overtake the US in biopharmaceutical leadership, we need to ensure America continues to be the most attractive place in the world to develop innovative medicines,” he stated.
Trump has devoted considerable time to criticizing the disparity in drug prices between the United States and other countries. During his initial term, he enacted a comparable executive order aimed at negotiating with pharmaceutical companies, a strategy that ultimately collapsed in the face of legal obstacles. “Although today’s announcement carries some headline shock, we continue to view it as unlikely the Trump administration will be able to successfully implement these policies,” stated BMO Capital Markets analyst Evan Seigerman in a note. In certain instances, Trump is “likely lacking legal standing to execute on what he outlines.”
Demands from Trump’s drugmaker:
- Offer the complete range of their pharmaceuticals at a Most Favored Nation rate for all individuals enrolled in Medicaid, the government initiative aimed at supporting low-income citizens in the United States.
- Ensure the lowest Most Favored Nation rate for all newly introduced pharmaceuticals provided to patients covered by Medicaid, Medicare, and private insurance plans.
- Engage in more rigorous negotiations with nations perceived as “foreign freeloaders” that contribute less to the cost of their medicines, ensuring that the benefits are redirected to the United States in the form of reduced drug prices for American consumers via a formal agreement with the government.
- Provide consumers and businesses with direct purchasing options for high-volume pharmaceuticals that are eligible for substantial rebates from drug managers, ensuring that all Americans have access to the same low prices available to third-party payers.
In a letter issued on Thursday, Trump articulated his intention to leverage US trade policy to facilitate drug companies in negotiating elevated prices with foreign nations, while insisting that the resulting revenues be allocated towards reducing drug costs for American consumers. Firms would be required to provide specific commonly utilized medications directly to consumers, pricing them in alignment with the discounts that pharmaceutical companies currently extend to third-party insurers.
The implications of Trump’s latest demands on US consumer savings remain ambiguous, given that the proposal primarily targets newly launched pharmaceuticals. Moreover, pharmaceutical companies are mandated to offer significant discounts on their medications to qualify for participation in the Medicaid program. Although the pharmaceutical industry has predominantly pushed back against Trump’s pressures, there are indications of some concessions being made. AstraZeneca Plc’s Chief Executive Officer Pascal Soriot diverged from the consensus of his pharmaceutical industry counterparts earlier this week, recognizing that the prevailing circumstances are untenable.
AstraZeneca, Amgen Inc., GSK Plc, and Regeneron Pharmaceuticals Inc. refrained from providing any comments. A representative from Lilly indicated that the firm is currently in the process of reviewing the letter. A spokesperson for Novo stated that it “remains focused on improving patient access and affordability.” Pfizer indicated that it is engaging with Congress and the White House to enhance access, whereas Merck KGaA expressed its willingness to collaborate with the US government to achieve the same objective. Trump stated that pharmaceutical companies are required to ensure “immediate relief” from “vastly inflated drug prices,” in a letter he shared on his social media platform, directed to Lilly Chief Executive Officer Dave Ricks.
