Trump Sets 30-Day Deadline for Drugmakers to Lower Prescription Drug Prices
Drug manufacturers face a 30-day ultimatum from Trump to decrease the prices of their prescription drugs
In a bold move, President Donald Trump announced he'll sign an executive order on Monday, aiming to slash prescription drug prices for American patients and taxpayers. The order, which calls for government negotiation of drug prices, could disrupt the pharmaceutical industry if a deal isn't struck.
According to White House insiders, the order tasks the Department of Health, led by Robert F. Kennedy Jr., to broker new deals on drug prices. If negotiations fail, a new rule will be imposed, tying the cost of U.S. medications to those charged in countries with lower prices.
Trump hinted at the upcoming order in a Sunday evening social media post, promising a "MOST FAVORED NATION'S POLICY" that would ensure the United States pays the lowest price for prescription drugs anywhere in the world.
The federal government spends hundreds of billions on medications every year through Medicare, which covers nearly 70 million older Americans. However, the nation's leading pharmaceutical lobby has criticized this move, calling it a "bad deal" for American patients. Critics argue that threatening drugmakers' profits could jeopardize the research they do to develop new drugs.
Trump first vocalized this approach to Medicare drug pricing during his first term, signing a similar executive order in the final weeks of his presidency. But his attempts face hurdles, with legal challenges stalling implementation under President Joe Biden's administration.
Trump insists this plan will save taxpayers billions of dollars, claiming trillions overall. However, the health department's control over drug pricing is limited, with the most authority over the prices it pays for Medicare and Medicaid. The price that millions of Americans covered by private insurance pay for drugs is harder to manipulate.
Inside the Executive Order
- Price Alignment with Other Countries: The order directs the U.S. Trade Representative and Secretary of Commerce to take action against foreign countries unfairly undercutting U.S. market prices, aiming to ensure America secures fair pricing deals.
- Most-Favored-Nation Pricing Mechanism: Patients would buy drugs directly from manufacturers at a "Most-Favored-Nation" price, potentially bypassing intermediaries (middlemen), thereby reducing costs for consumers.
- Authority to Enforce Pricing: If drug manufacturers resist, the HHS Secretary can propose rules mandating such pricing and implement aggressive measures to lower drug costs and combat anticompetitive practices by manufacturers.
- Medicare Reforms: Reforms to the Medicare Drug Price Negotiation Program prioritize negotiating high-cost drugs, improve transparency, and hinder shifts toward more expensive hospital outpatient drug administration.
- Additional Measures: The order encourages importation of prescription drugs, mandates community health centers to pass on discounted 340B drug prices to low-income patients, and calls for improvements to the Medicaid Drug Rebate Program to ensure accurate rebates linked to drug value.
Role of Department of Health and Human Services (HHS)
The HHS Secretary plays a pivotal role in implementing the executive order’s strategies, including setting up the MFN pricing mechanism, proposing regulations to enforce pricing if manufacturers resist, conducting surveys of drug acquisition costs at hospitals, adjusting Medicare payments, and developing payment models to obtain better value for high-cost drugs.
Potential Impact on Drug Manufacturers
Drug manufacturers face pressure to offer lower drug prices aligned with MFN pricing or face regulatory actions from HHS that could impose such pricing requirements. The executive order seeks to end anticompetitive practices by drug makers and potentially reduce their pricing power and margins on prescription drugs sold in the U.S.
By setting price targets and leveraging America’s purchasing power, the order aims to compel manufacturers to provide the best possible price to the U.S. market, leading to lower revenues for some drugs. However, the order also acknowledges the need to minimize negative impacts on pharmaceutical innovation while controlling costs.
- In a significant move, President Donald Trump announced an upcoming executive order to lower prescription drug prices, aiming to align prices with those of countries that have lower prices.
- The executive order tasks the Department of Health, under the leadership of Robert F. Kennedy Jr., to negotiate new deals on drug prices.
- If negotiations with drug manufacturers fail, the order could potentially impose a rule that ties the cost of U.S. medications to those charged in countries with lower prices.
- Critics argue that this move could jeopardize the research done by drugmakers to develop new drugs, as threatening their profits may be a concern.
- In addition to these measures, the order encourages the importation of prescription drugs, mandates community health centers to pass on discounted drug prices to low-income patients, and calls for improvements to the Medicaid Drug Rebate Program.
