Trump orders drug makers to slash US prices
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The news: US President Donald Trump signed a sweeping executive order directing drugmakers to cut US prescription drug prices to match what people in other countries pay, setting a 30-day deadline to offer new prices or face new limits on what the government will pay.
In a social media post, Trump said he was seeking cuts of “59%, PLUS!” after promising price cuts of 30% to 80% over the weekend.
According to the order, if companies do not make “significant progress” within six months, the government will use rulemaking to bring prices to international levels and may also consider drug importation, export restrictions, and direct-to-consumer purchasing, media reports show.
The order directs the Federal Trade Commission to enforce against anti-competitive practices.
The context: The order first seemed to go beyond what industry expected, but as details emerged, it was seen as weaker than feared. It is nontheles likely to face legal challenges, according to a health policy lawyer cited by Reuters.
Trump said his order was partly prompted by a friend who told him a weight loss injection had cost him USD88 in London but then USD1,300 in the US.
Health Secretary Robert F Kennedy Jr will lead efforts to broker new drug prices, where the government has most control over Medicare and Medicaid.
The numbers: The announcement initially triggered a sell-off in pharmaceutical stocks, but shares later rebounded, with Merck up 4.3%, Pfizer 2.7%, and Gilead 4.7%. Eli Lilly dipped slightly.
Drugmakers also posted losses in Europe and in Japan, where the pharmaceuticals subgroup in the Topix Index saw its biggest one-day drop since August.
What they said: “The executive order is vague with little detail on implementation,” Michael Yee, a Jefferies analyst, wrote in a note to clients. The stock market “reaction is positive, with the interpretation being ‘better than feared.’”
The sources: White House fact sheet, Reuters, Bloomberg
