President Donald Trump signed an executive order this morning that would lower drug prices to compete with costs other countries pay.
Other countries often pay less than the US in drug prices, according to health policy research organization KFF’s 2022 tracker. For example, AbbVie’s Humira, which is used to treat inflammatory conditions like rheumatoid arthritis and Crohn’s disease, was 423% more expensive than in the UK and 186% more than in Germany in 2019 when the countries last provided that data.
Naming the initiative the “most favored nation” policy, Trump announced this morning on Truth Social he would cut drug prices by more than half. The executive order, which he elaborated on in a press conference this morning, calls for Health and Human Services Secretary Robert F. Kennedy Jr. to create a path for patients to buy directly from drugmakers, and it encourages him to take “aggressive measures” to reduce drug prices and “end anticompetitive practices.”
The EO also gives the US trade representative and secretary of commerce the ability to “take action” against foreign countries that engage in “practices that purposefully and unfairly undercut market prices and drive price hikes” in the US.
Under the 2022 Inflation Reduction Act, President Joe Biden implemented a program to allow the Centers for Medicaid and Medicare to negotiate prices directly with drugmakers—though those pharma companies weren’t exactly happy with the law, as we previously reported.
Mixed reactions. In response to the news, pharma stocks across the board rose after the president’s press conference.
Johnson & Johnson opened at $151.88 this morning and hit a high of $155.27 an hour later. Eli Lilly’s day started at $725.11 and peaked at $764.71 after this afternoon.
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PhRMA president and CEO Stephen Ubl told Healthcare Brew in an emailed statement he believes drug prices in the US are higher because of all the intermediaries. “The US is the only country in the world that lets PBMs, insurers, and hospitals take 50% of every dollar spent on medicines,” he said.
AARP EVP and Chief Advocacy and Engagement Officer Nancy LeaMond also issued a statement in favor of the EO. “For too long, big drug companies have been ripping off America’s seniors,” she said. “We strongly support efforts to bring down drug costs, including safe importation from other countries,” she said.
However, CEO of the Health Transformation Alliance Robert Andrews, said in an emailed statement that he was “concerned that the industry may attempt to shift costs onto employers and employees.”
“We believe that a value-based pricing system—one that measures the value of [prescription] products by the health outcomes they produce—could serve the goals of fair pricing and continued innovation for cures,” he added.
Think tank the Cato Institute’s Director of Health Policy Studies Michael Cannon echoed this sentiment, pointing to Medicare and Medicaid overpaying for prescription drugs, which then impacts prices for private purchasers.
“Government should not purchase medicines for civilians. Period,” Cannon said in a statement. “These programs pay excessive prices in part because Congress largely let the pharmaceutical industry write each program’s drug-pricing rules.”
Bank Vontobel analyst Stefan Schneider reportedly said that to make these drug price cuts would likely involve cuts to Medicare and Medicaid and could impact hospitals.
“This has the potential to be very negative for the industry,” he said, according to Yahoo! Finance.