Trump Vows US Drug Price Cuts of Up to 80% in Industry Blow
Category: News & Politics
Via: vic-eldred • last year • 10 commentsBy: Story by Rachel Cohrs Zhang, Derek Wallbank and Hadriana Lowenkron
S E E D E D C O N T E N T
(Bloomberg) -- President Donald Trump said he plans to order a cut in US prescription drug costs by mandating that Americans pay no more than people in countries that have the lowest price.
In a social media post, Trump said that he’ll sign an executive order at 9 a.m. Monday in Washington to institute what he called a most-favored nation policy. While he didn’t give details, shares in drugmakers across Europe and Asia tumbled on Monday as investors grappled with the potential implications for the world’s largest pharmaceutical market.
Trump said his plan would see the US “pay the same price as the Nation that pays the lowest price anywhere in the World.” While predicting that pharmaceutical prices could drop 30% to 80% in the US, Trump also said prices would likely “rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!”
In Europe, obesity-drug maker Novo Nordisk A/S fell as much as 8.6% in early trading, one of the steepest decliners in the Stoxx 600 Health Care Index. France’s Sanofi SA tumbled as much as 6.4% and AstraZeneca Plc fell as much as 5.8%.
Asian drugmakers tumbled even as hopes for a US-China trade deal boosted markets in the region. Japan’s Chugai Pharmaceutical Co. plunged 11%, the biggest one-day loss in 14 years, while Daiichi Sankyo Co. and Takeda Pharmaceutical Co. also slumped.
The Hong Kong-listed shares of BeiGene Ltd., which earns most of its revenue in the US, tumbled 10%. China’s largest pharma company, Jiangsu Hengrui Pharmaceuticals Co., was also swept up in the selloff, falling more than 4% despite not currently marketing any medicines in the US.
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Americans pay the most in the world for medicines, fueling innovation and driving the growth of the pharmaceutical industry. Drugmakers have said revamping the system will slash revenue and stifle the development of breakthrough therapies that have the potential to lengthen and improve lives.
Trump cited the industry’s argument, but said it meant that “the ‘suckers’ of America” ended up bearing those costs “for no reason whatsoever.”
The US government already negotiates prices for some of the highest-cost medicines used in Medicare health insurance under the Inflation Reduction Act , which passed in 2022 under former President Joe Biden, with more slated to be added every year. The first two rounds of drug price negotiations haven’t included physician-administered drugs, but the next round might.
Trump’s Truth Social post — preceded by an earlier one that promised “one of the most important and impactful” posts he has ever issued — didn’t offer specifics on the order.
He also didn’t outline potential limits on the policy, such as whether it would apply only to government programs such as Medicare or Medicaid, if it would be limited to certain drugs or categories of drugs or if the White House sees a way to apply this more broadly.
While it’s still unclear which drug companies will be affected by the executive order, investors are most worried about blockbuster drugs in Medicare Part-B and drugs serving large Medicaid populations, according to Jared Holz, a health-care strategist at Mizuho Securities USA LLC.
Billionaire hedge fund manager Bill Ackman suggested Trump might have been inspired by an idea he floated on X in March, when he said the best way to reduce US drug prices “is to make it illegal for drug companies to sell the same drugs abroad for lower prices than they sell them for here.”
In his first term, Trump proposed a Medicare pilot program for drugs with no low-cost generic competition that are given in doctor’s offices, saying he wanted to bring prices in line with countries like France and Japan where they cost dramatically less.
That plan , which would have phased in over three years, aimed to ensure Medicare paid the lowest price offered to a group of 22 nations.
The effort was struck down in federal court after drug companies challenged it, claiming the administration hadn’t properly carried out the rulemaking process. The Biden administration didn’t appeal that finding, and instead pursued legislation that led to the Inflation Reduction Act.
The latest proposal may also face difficulties, according to analysts.
“There is no easy way forward, as the executive order needs to be passed by the Senate to become legislation,” Cui Cui, an analyst at Jefferies, wrote in a note. The plan is expected to face pushback from both the Senate as well as the industry, she wrote.
--With assistance from Kanoko Matsuyama, Amber Tong and Gerry Smith.
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Same Drugs, Different Prices | List prices of select drugs in the US, Japan and China © Company and government disclosures, media reports
In other words, Americans will no longer be subsidizing Socialist and Communist countries.
Wow! When I became a Senior Citizen in Canada (age 65), once I paid an annual registration fee of $100 at a pharmacy, all my prescription drugs cost me was a small pharmacists' dispensing fee. Even though I take a lot of medications here in China I spend only the equivalent of around US$25 a month for them.
Why would Americans be subsidizing Socialist and Communist countries? I'll assume you consider Canada a Socialist country when it comes to health care, and what difference will Trump's plan make for Canada? Why would what Chinese manufacturers are being paid by American importers for medications be less than before?
Because pharmaceutical companies will make profits when & where they can. They are among the most powerful lobbies in the US.
I'll assume you consider Canada a Socialist country when it comes to health care, and what difference will Trump's plan make for Canada?
Yes, I absolutely believe that Canada is among the great nanny states in health care. With Trump's plan big pharma will have to decide what it will do elsewhere but it cannot overcharge Americans anymore.
Why would what Chinese manufacturers are being paid by American importers for medications be less than before?
That is another issue. If Trump has his way, the US will award certain companies the role of procuring critical elements that go into medicine production. Thus, the US won't be relying on China for medicine or certain masks like it did during covid. Just remember, he didn't blame China. He said Xi did what any leader most likely would have done given such great opportunity. Trump blamed previous American leaders, whom he described as "stupid people."
All of which really needs to be enacted into law.
Overcharging was rampant for pharmaceuticals, epi-pens in particular - the Mylan company, was a notorious case of overcharging, and it had to settle because of it by paying out almost half a billion dollars.
That happened in Canada?
No it's an American company, and the issue was raised in America.
Why do you suppose they overcharged Americans?
I don't know. Greed? Read about it yourself:
Mylan finalises $465m deal with US government over EpiPen
LINK -> Mylan finalises $465m deal with US government over EpiPen | pharmaphorum
Trump really is a democrat at heart. This is basically the same thing we’d get from sanders or aoc as president. Whatever favorable headlines it generates in the short term will be dwarfed by catastrophic long term consequences. Price controls don’t work.
foreign countries are going to simply steal the prescriptions and license them on their own, look at the massive amount of IP theft China already commits. They aren’t going to play by the rules. Companies will cut research to stay viable and Americans will die as innovation stops.
Why do your comments make me think of what Abba Eban once said about Yasser Arafat? "He never misses an opportunity to miss an opportunity."