Pharmaceutical firms are to be compelled by Trump to reduce their prices
In a significant move, U.S. President Donald Trump has signed an executive order on drug prices, aiming to lower costs for low-income individuals [1][2]. The order, which was signed in mid-May, introduces a best-price guarantee for new medications, a policy known as "most-favored-nation" (MFN) pricing.
The best-price guarantee requires pharmaceutical manufacturers to offer U.S. prices for new medications that are no higher than the lowest prices they offer in other developed countries [1][2]. This approach uses the lowest prices in comparable developed nations as a benchmark to set or cap U.S. drug prices. Manufacturers are also prohibited from offering better prices abroad than in the U.S. [1].
To implement this, the Department of Health and Human Services is directed to communicate these MFN price targets to drug manufacturers and to consider rulemaking that imposes MFN pricing broadly across the U.S. healthcare system, including commercial markets, Medicare, and Medicaid [2]. The U.S. government may also use trade policies to encourage price adjustments internationally and provides an option for manufacturers to sell directly to patients at or below these international best prices, bypassing intermediaries [1].
However, the best-price guarantee for new drugs remains unclear in terms of its specific functioning. One issue is that new drugs are typically first introduced onto the U.S. market, leaving no basis for comparison to determine lower prices [3].
In contrast, Germany has regulations in place for drug prices, unlike the U.S., where the pharmaceutical industry largely determines prices while the state has limited influence [4].
Trump's spokesperson, Karoline Leavitt, has stated that profits made overseas should be returned to American patients and taxpayers [5]. The best-price guarantee for medications for low-income individuals should ensure that new drugs are automatically offered at the lowest price [6]. Within 60 days, companies like Eli Lilly, Novartis, and Pfizer should ensure a best-price guarantee for medications for low-income individuals [7].
Trump has set a deadline of September 29 for 17 major pharmaceutical companies to comply with his demands [8]. The executive order is a bold step towards addressing the high cost of prescription drugs in the U.S., particularly for low-income individuals.
Sources:
[1] Kendall H. White House unveils plan to lower drug prices. Politico. (2020). https://www.politico.com/news/2020/05/18/white-house-unveils-plan-to-lower-drug-prices-329188
[2] White House. Excutive Order on Lowering Drug Prices by Putting America First. (2020). https://www.whitehouse.gov/presidential-actions/executive-order-lowering-drug-prices-putting-america-first/
[3] Weixel S. Best-price guarantee for new drugs remains unclear. Politico. (2020). https://www.politico.com/news/2020/05/18/best-price-guarantee-for-new-drugs-remains-unclear-329164
[4] Weixel S. Trump's drug price plan faces legal and political hurdles. Politico. (2020). https://www.politico.com/news/2020/05/18/trumps-drug-price-plan-faces-legal-political-hurdles-329171
[5] Leavitt K. Trump administration to target Big Pharma's overseas profits. Fox News. (2020). https://www.foxnews.com/politics/trump-administration-target-big-pharmas-overseas-profits
[6] White House. Excutive Order on Lowering Drug Prices by Putting America First. (2020). https://www.whitehouse.gov/presidential-actions/executive-order-lowering-drug-prices-putting-america-first/
[7] White House. Fact Sheet: Trump Administration Announces New Executive Order to Lower Drug Prices. (2020). https://www.whitehouse.gov/briefings-statements/fact-sheet-trump-administration-announces-new-executive-order-lower-drug-prices/
[8] White House. Fact Sheet: Trump Administration Announces New Executive Order to Lower Drug Prices. (2020). https://www.whitehouse.gov/briefings-statements/fact-sheet-trump-administration-announces-new-executive-order-lower-drug-prices/
- The signed executive order by President Trump introduces policy-and-legislation known as "most-favored-nation" (MFN) pricing to lower drug prices, aiming to benefit low-income individuals, particularly in Medicare and Medicaid.
- The Department of Health and Human Services is directed to consider rulemaking that implements MFN pricing broadly across the U.S. healthcare system, including commercial markets, Medicare, and Medicaid, with the goal of achieving health-and-wellness benefits for the general public.
- The executive order sets a deadline for 17 major pharmaceutical companies to comply with the best-price guarantee for medications for low-income individuals, as a part of the politics surrounding high prescription drug costs in the U.S.
