The same medicine and the same price? Trump will mandate U.S. drug prices to be the same as those in the lowest price countries, saying

Source: Wall Street Journal

Trump Takes Another Swing at Pharmaceutical Industry, Announces Drug Prices to Match Global Lows

On Sunday evening local time, Trump announced on social media that he plans to sign a sweeping executive order on Monday to force U.S. prescription drug prices to match those of the lowest-cost countries globally. He claims this will lead to an immediate 30-80% drop in prescription and drug prices in the U.S., while global prices will rise to balance out, bringing "fairness" to America for the first time in years.

Key details of the executive order remain unclear, including whether the policy will apply only to government programs, specific drug categories, or the exact implementation mechanism.

Following the announcement, Japan's pharmaceutical index tumbled 3.9% on Monday, making it the worst-performing sector on the Tokyo Stock Exchange.

Current Pricing System Set to Be Upended

Trump believes the policy will "unprecedentedly" reduce U.S. healthcare costs.

Pharmaceutical companies have long argued that high prices are necessary to fund innovation and research for new treatments. They warn that overhauling the system would slash revenues and stifle development of breakthrough therapies that save lives.

In response, Trump retorted that this means "Americans have been suckers paying these exorbitant prices for no reason." He also predicted global prices may rise to "balance things out and bring fairness to America for the first time," which could have far-reaching impacts on international drug markets.

Not Trump's First Attempt at Drug Pricing Reform

Notably, this isn't Trump's first effort to tackle U.S. drug prices.

During his first term, Trump proposed a Medicare pilot program targeting drugs with no low-cost generic competition and used in doctor's offices, aiming to align prices with countries like France and Japan.

The plan, set to roll out over three years, would have ensured Medicare paid no more than the lowest price offered in 22 countries. However, it was struck down in federal court after pharmaceutical companies challenged that the government had not followed proper rulemaking procedures.

The Biden administration did not appeal the ruling and instead pushed for legislation that led to the Inflation Reduction Act (IRA) in 2022.

Under the IRA, the federal government gained authority to negotiate prices for the highest-cost drugs covered by Medicare, with plans to expand negotiations annually. The first two rounds of negotiations did not include physician-administered drugs, but future rounds may.

Inspiration from Ackman?

Billionaire hedge fund manager Bill Ackman hinted Trump's latest move may have been inspired by his own proposal.

In March, Ackman tweeted:

"The best way to lower U.S. drug prices is to legislate that pharmaceutical companies cannot sell the same drug abroad for less than they charge in the U.S."

**Disclaimer**: The views expressed in this article are solely those of the author and do not constitute investment advice. This platform makes no warranties regarding the accuracy, completeness, originality, or timeliness of the information and shall not be liable for any losses arising from reliance on the content.