Pharmaceutical companies face a demand from Trump: Reduce drug prices in the U.S., or face potential consequences
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President Trump has been actively pressing for lower drug prices in the U.S., employing a variety of strategies including letters to drug company CEOs, executive orders, and potential tariffs. However, the effectiveness of these measures has been met with limited success and significant criticism.
In a series of letters to 17 major pharmaceutical companies, President Trump demanded they offer "most favored nation" pricing to Medicaid and not offer better prices to other countries. This approach, while aimed at parity, was criticised by advocates as weak, lacking legislative backing.
The President's executive orders targeted the linking of U.S. drug prices to the lower prices paid by other developed countries, a strategy known as "most-favored-nation" pricing. The intention was to address the issue of "global freeloading." However, experts argue that the high U.S. drug prices are primarily due to domestic policies mandating broad coverage regardless of drug value, an issue that Trump's approach did not fully address.
On the trade front, Trump proposed or threatened tariffs on pharmaceutical imports, initially up to 25%, with potential increases to 200%. The aim was to pressure drug prices downward. Industry experts, however, warned that these tariffs could disrupt supply chains and increase costs, with no clear evidence they would lower prices for consumers.
The President's order also directed federal agencies to investigate why European countries get lower prices for drugs and to push them to pay more. Moreover, the administration would consider taking regulatory actions or importing drugs from other countries if the companies do not comply.
In response to an executive order issued in May, drug companies submitted proposals to the White House, which Trump deemed insufficient. The letters from Trump also suggested selling more drugs directly to patients without insurance, a practice already seen for popular weight loss drugs like Wegovy.
It's unclear what regulatory or other steps the White House would take if drugmakers do not comply with Trump's request. The companies were given 60 days to comply with the order or face the consequences.
The pharmaceutical industry has lobbied against policies tying its U.S. price to what it charges overseas but has also backed initiatives to get other wealthy nations to pay more for drugs. Under the most favored nation model, the U.S. could only be charged the rate of the lowest price paid for a drug in a peer country.
Critics argue that without comprehensive legislation addressing underlying pricing and reimbursement frameworks domestically, such efforts remain symbolic or counterproductive. In the end, while President Trump has increased pressure through public and administrative actions, major drug price reductions have not been realised.
- The health-and-wellness sector, particularly drug prices, has been a focus of politics, with President Trump pushing for lower costs via policies such as letters to pharmaceutical companies, executive orders, and potential tariffs.
- President Trump's effort to implement 'most favored nation' pricing, where countries like the U.S. would be charged the lowest price paid for a drug in a peer country, has been met with critique, with experts suggesting it lacks legislative backing and may not lead to substantial drug price reductions.
- The science behind drug pricing, heavily influenced by policy-and-legislation, has been a contentious topic in the general news, as the industry grapples with concerns over global competitiveness, tariffs, and domestic policies impacting drug value.
