Pharmaceutical firms to face price reductions at Trump's command
In a bid to address the rising cost of prescription drugs in the United States, President Donald Trump has issued an executive order that requires pharmaceutical companies to price new medications at or below the lowest price they offer in other developed countries. This "most-favored-nation" (MFN) pricing aims to reduce U.S. drug prices by aligning them with international prices, which are often substantially lower.
The order, announced on Thursday, puts 17 major pharmaceutical companies on notice to comply with these demands within 60 days. Companies such as Eli Lilly, Novartis, and Pfizer are expected to ensure a best-price guarantee for medications and offer new drugs at the lowest price.
One of the key impacts of this executive order is the price matching requirement. Drug manufacturers must provide MFN prices for Medicaid patients and ensure that new drugs are not priced higher in the U.S. than in other developed nations. This contrasts with the previous U.S. system where drug prices are generally higher than abroad.
The order also encourages manufacturers to sell medicines directly to patients, bypassing intermediaries, but only at prices no higher than the best international price available. Furthermore, the government may support manufacturers in raising prices internationally, with the stipulation that increased revenues abroad be reinvested to lower U.S. prices.
According to the White House, aligning prices and standardizing Medicare prescription payments could lower drug prices for patients by up to 60%. The policy also aims to stop U.S. patients from subsidizing lower prices in other countries by enforcing price parity.
However, it's important to note that the pharmaceutical industry largely decides how much drugs cost in the U.S., while the state has only limited influence. The specifics of how the best-price guarantee for new drugs will work exactly remain unclear, and the government has yet to clarify enforcement mechanisms if companies fail to comply.
This executive order seeks to reshape pharmaceutical pricing by legally pushing companies to reduce the U.S. price of new drugs to best global prices, potentially narrowing the historic price gap between the U.S. and other developed countries. Whether this initiative will be successful remains to be seen, but it's a significant step towards addressing the issue of high drug prices in the U.S.
References: [1] White House. (2020). Fact sheet: President Donald J. Trump's historic executive order to lower drug prices and reduce out-of-pocket costs. [online] Available at: https://www.whitehouse.gov/briefings-statements/fact-sheet-president-donald-j-trumps-historic-executive-order-lower-drug-prices-reduce-out-of-pocket-costs/
[2] Axios. (2020). Trump's drug price plan: What it does and doesn't do. [online] Available at: https://www.axios.com/trump-drug-price-plan-what-it-does-and-doesnt-do-f2f68d73-3012-4b8b-b48a-e93c73681f72.html
[3] The New York Times. (2020). Trump's new drug-pricing plan: What it is and what it isn't. [online] Available at: https://www.nytimes.com/2020/05/15/business/trump-drug-prices.html
[4] The Washington Post. (2020). Trump's drug price plan would require companies to match foreign prices. Here's what that means. [online] Available at: https://www.washingtonpost.com/business/2020/05/15/trumps-drug-price-plan-would-require-companies-match-foreign-prices-heres-what-that-means/
- The economic and social policy, announced by President Trump, aims to address the rising cost of prescription drugs by requiring pharmaceutical companies to price new medications at or below the lowest price they offer in other developed countries, a practice known as most-favored-nation (MFN) pricing.
- The health-and-wellness sector may undergo changes due to the policy-and-legislation enacted by the Trump administration, as the order encourages direct sales of medicines to patients, bypassing intermediaries, at prices no higher than the best international price available.
- The general news landscape has been abuzz with the implications of the executive order on policy-and-legislation surrounding Medicare, as the White House claims the policy could lower drug prices for patients by up to 60%, and potentially stop U.S. patients from subsidizing lower prices in other countries by enforcing price parity.
