Trump seeks to match US drug costs with cheaper ones abroad

WASHINGTON – US President Donald Trump said he plans to sign an executive order to cut prescription drug prices by mandating that the US pay the same price for drugs as whichever country pays the lowest price in the world.

He said in a social media post that he would sign the order at 9am on May 12 (9pm Singapore time) in Washington.

Mr Trump predicted pharmaceutical prices could drop 30 per cent to 80 per cent in the US, though he also said prices would likely “rise throughout the World in order to equalise and, for the first time in many years, bring FAIRNESS TO AMERICA!”

He said he would institute what he called a most-favoured nation policy “whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World.”

Healthcare costs in the US “will be reduced by numbers never even thought of before,” he said. 

Asian pharmaceutical companies fell in early May 12 trading.

Japanese drugmaker Chugai Pharmaceutical Co dropped as much as 7.2 per cent – the most in a month – with peers Daiichi Sankyo Co and Takeda Pharmaceutical Co losing around 5 per cent.

In South Korea, SK Biopharmaceuticals Co, Celltrion Inc and Samsung Biologics Co all fell over 3 per cent. 

The news also weighed on Chinese drugmakers.

Among companies with commercial drugs in both the US and China, Hong Kong-listed shares of BeiGene fell as much as 8.8 per cent, while Hutchmed China dropped 5.6 per cent.

Jiangsu Hengrui Pharmaceuticals Co, China’s largest pharma company, also saw its shares fall as much as 4.4 per cent despite not currently marketing any medicines in the US. 

Americans pay more for medicines than any other country in the world, fuelling innovation and driving the growth of the pharmaceutical industry.

Drugmakers have said revamping the system will slash revenue and stifle the development of breakthrough therapies that have the potential to lengthen and improve lives.

Mr Trump cited the industry’s argument, but said it meant that “the ‘suckers’ of America” ended up bearing those costs “for no reason whatsoever.”

The US government now negotiates the price of some of the highest-cost medicines used in Medicare under the Inflation Reduction Act, which passed in 2022 under former President Joe Biden, with more slated to be added every year.

The first two rounds of drug price negotiations have not included physician-administered drugs, but the next round might.

Mr Trump’s Truth Social post – preceded by an earlier one that promised “one of the most important and impactful” posts he has ever issued – did not detail how the order would work. 

He also did not specify potential limits on the policy, such as whether it would apply only to government programmes such as Medicare or Medicaid, if it would be limited to certain drugs or categories of drugs or if the White House sees a way to apply this more broadly. 

Billionaire hedge fund manager Bill Ackman suggested Mr Trump might have been inspired by an idea he floated on X in March, when he said the best way to reduce US drug prices “is to make it illegal for drug companies to sell the same drugs abroad for lower prices than they sell them for here.”

In his first term, Mr Trump proposed a Medicare pilot programme for drugs with no low-cost generic competition that are given in doctor’s offices, saying he wanted to bring prices in line with countries like France and Japan where they cost dramatically less. 

That plan, which would have phased in over three years, aimed to ensure Medicare paid the lowest price offered to a group of 22 nations.

The effort was struck down in federal court after drug companies challenged it, claiming the administration had not properly carried out the rulemaking process.

The Biden administration did not appeal that finding, and instead pursued legislation that led to the Inflation Reduction Act. BLOOMBERG