Trump Demands Big Pharma Cuts Drug Prices Within 60 days

Topline

President Donald Trump on Thursday demanded 17 pharmaceutical companies cut down their drug prices for American consumers, issuing a Sept. 29 deadline for the businesses to “end the free ride of American innovation by European and other developed nations.”

Trump sent the letters out to big pharmaceutical companies Thrusday. (Photo by Win McNamee/Getty Images)

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Key Facts

Trump listed his demands in letters to over a dozen pharmaceutical companies including AbbVie, Pfizer, Novo Nordisk and Eli Lilly.

The president’s demands revolve around his “most-favored-nation” drug pricing policy, which seeks to slash U.S. drug prices to the lowest prices paid in other developed countries.

Trump asked the pharmaceutical companies to make their existing drugs available at “most-favored-nation” rates for all Medicaid patients and to guarantee “most-favored-nation” pricing for newly-launched drugs.

He also demanded the companies take “increased revenues” made in other countries and repatriate them to lower drug prices for American patients.

The president’s final ask demands the pharmaceutical companies apply “most-favored-nation” pricing for direct-to-consumer prescription drugs.

Trump said his administration will “deploy every tool in our arsenal” to slash drug prices if the companies do not meet the 60-day deadline.

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What Other Pharmaceutical Companies Received Trump’s Letter?

Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, EMD Serono, Genentech, Gilead, GSK, Johnson & Johnson, Merck, Novartis, Regeneron and Sanofi also received Trump’s list of demands.

What Have Some Pharmaceutical Companies Said About Trump’s Demands?

Pfizer said it is “working closely with the Trump administration and Congress on solutions that will increase access and affordability for American patients,” noting discussions have been “productive.” AbbVie did not immediately respond to a request for comment. Novo Nordisk media relations director Jamie Bennett did not directly address Trump’s letter when asked for comment, saying the company “remains focused on improving patient access and affordability, and we will continue to work to find solutions that help people access the medication they need.” Eli Lilly declined to comment, referring Forbes to Pharmaceutical Research and Manufacturers of America. Alex Schriver, the trade association’s senior vice president, said “importing foreign price controls would undermine American leadership” and hurt patients and workers, adding, “To reduce price differentials with other countries, policymakers should rein in health care middlemen driving up costs for Americans and get foreign countries to pay their fair share for innovative medicines.”

How Did Pharmaceutical Stocks React?

Share prices dropped for some of the pharmaceutical companies targeted by Trump in the letters. Novo Nordisk closed down nearly 6% at $47.07, its lowest point of the year, while AstraZeneca’s stock fell 4.6%. Eli Lilly shares slid 2.6% by market close, contributing to an 8% drop in its last five days of trading. Pfizer and Amgen also dropped over 2%.

Contra

Earlier this month, Trump floated a 200% tariff rate on U.S. pharmaceutical imports that would become effective in a year. The fee could impact some $200 billion in imports and potentially lead to higher co-pays or out of pocket medication costs. The highest importers of pharmaceuticals into the U.S. last year were Ireland ($50.3 billion in imports), Switzerland ($19 billion), Germany ($17.1 billion), Singapore ($15.3 billion) and India ($12.5 billion), according to data from an MIT-affiliated data platform known as the Observatory of Economic Complexity.

Key Background

Trump signed the “Most-Favored Nation” executive order in May, aiming to align domestic drug prices with those of other developed countries. The president attempted to do the same during his first term in office, but that effort was later blocked by the Biden administration after facing legal challenges from pharmaceutical companies and trade groups. Experts with the USC Schaeffer Institute for Public Policy & Government Service have pointed out the “most-favored nation” approach can be easily gamed, saying drug companies and customers abroad can agree to confidential rebates, which is already common, to create the appearance of higher prices. The experts also noted about 70% of global pharmaceutical profits are rooted in the U.S. market and that companies may pull out from overseas markets when deciding between U.S. pricing cuts or the loss of overseas markets, “leaving U.S. consumers with the same prices, pharmaceutical manufacturers with lower profits, and future generations with less innovation.”