Trump administration lays out more details of plan to lower drug prices
“We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do,” HHS Secretary Robert F. Kennedy Jr. said in a statement.
The announcement offers new details about the sweeping executive order signed by President Trump last week. The order was more aggressive than Trump’s previous attempt to set US drug prices based on what other countries pay, seeking to lower drug prices for all Americans, not just those in government programs.
Specifically, the plan asks companies to set their US drug prices at the lowest level offered in countries that are part of the Organization for Economic Co-operation and Development and that have at least 60 percent of the gross domestic product per capita of the United States. Countries that appear to meet the GDP threshold include Germany, France, and the United Kingdom.
The announcement still leaves plenty of questions unanswered, such as the specific consequences for companies that don’t lower their prices, or which prices the companies will be asked to lower. Drugs sold in the United States do not have a single price — different commercial insurers, Medicaid, and Medicare may all face different costs. What they pay is not necessarily connected to how much a patient owes when they pick up a prescription at the pharmacy.
The statement didn’t include a timeline for action, but said Trump and Kennedy would highlight commitments by companies to lower their prices “in the coming weeks.”
“We are already in negotiation with the drug companies to discern the ways that they’re going to comply,” Kennedy said at a Senate hearing on Tuesday.
The pharmaceutical industry said in a statement that the approach would be destructive and ignores the cause of high prices.
“To lower medicine prices for Americans policymakers must address the real reasons we pay more: middlemen inflating prices and foreign countries not paying their fair share,” said Alex Schriver, senior vice president of the trade group PhRMA. He added that the group was committed to working with the administration to lower prices.
The consequences for companies that don’t comply could be substantial, if the order stands up to legal scrutiny. The Trump administration has threatened action across the federal governments to “force” down prices if they aren’t satisfied with negotiations.
Pharmaceutical companies are considering potential legal challenges — while also weighing how they may negotiate with the administration, STAT has previously reported.
David Risinger, an analyst at Leerink Partners, called the demand to lower drug prices “extreme,” and said pharma companies won’t be able to comply.
“In our view, biopharma industry executives need to further educate the Trump administration about highly problematic aspects of this pricing expectation,” he wrote in a note to clients. “Specifically, such extreme pricing would significantly harm a crown jewel US industry, collapse US investment spending, and undercut US innovation at a time when China is supporting booming biopharma innovation.”
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