Trump Prescribes Deep Discounts for Big Pharma

Pharma companies may need more than a spoonful of sugar to digest President Trump’s latest prescription: An executive order he said will slash US drug prices anywhere from 59% to “even 90%.” 

The “Most-Favored Nation” policy calls for the US to pay the lowest drug prices of any developed nation, a full 180-degree turn from pricing today. The US pays nearly three times as much for prescription drugs as other developed nations, and three-quarters of Americans told KFF that medications aren’t affordable. 

Trump said the discounts will roll out “almost immediately.” Drugmakers were urged to lower their prices within 30 days, at which time the government will decide its own price caps.

Behind-the-Counter Complications

Prescription drugmakers are taking jab after jab. Pharmaceutical tariffs are set to roll out within a week, while mass Food and Drug Administration layoffs have forced biotech companies to delay drug trials and tests. Big Pharma says the “Most-Favored Nation” plan could further hurt the industry’s profits and cut into their budgets for developing new medicines.

A USC study found that 70% of global pharmaceutical profits come from the US, and the US says that’s too much: 

• The White House argues that pharma companies are too dependent on the US paying a premium. Trump said his executive order will stop the US from subsidizing other countries’ healthcare. 
• Top execs of European drugmakers including Novartis and Sanofi have previously pushed the EU to allow higher drug-pricing to incentivize investment in the region. AstraZeneca said it’s already shifting some EU production stateside and predicted more will follow.

Part of the reason the US pays more is systemic. European governments that provide national health care negotiate with drugmakers directly, giving them more leverage to keep prices low. Meanwhile in the US, pharmacy benefit managers and pharmacies negotiate prices — and have been found to add a premium of their own to some drugs. 

Multiple Treatments: Part of Trump’s plan calls for Health and Human Services Secretary Robert F. Kennedy Jr. to find a way for patients to buy drugs directly from manufacturers and bypass price-raising go-betweens. The private sector’s trying to solve that problem in its own way. Eli Lilly launched its own website last year, where people can buy Zepbound and other select medicines directly from the drugmaker. Before that, Mark Cuban’s Cost Plus Drugs platform promised to skip intermediaries and offer drugs to patients at lower prices.