Trump wants other countries to bear pharma R&D cost

US President Donald Trump announced plans on Monday, May 12, to sign an executive order aimed at significantly lowering prescription drug prices in the United States by aligning them with the prices paid by other wealthy nations.

Under this new initiative, the US government will give pharmaceutical companies specific price targets to meet within the next 30 days.

If companies fail to make “substantial progress” in reaching these targets within six months, the administration will take further action, including potentially using rule-making to bring drug prices down to international levels.

Trump’s proposal comes as part of his ongoing push to reduce the high cost of prescription drugs in the US, where prices often exceed those in other developed countries by nearly three times.

The core of the plan seeks to shift a significant portion of the pharmaceutical industry’s research and development (R&D) costs to other countries, which currently pay less for medications.

Legal hurdles

While the order is intended to drive down drug costs, it is likely to face significant legal challenges, especially since it does not include any legislative backing from the US Congress.

In the past, similar efforts by the Trump administration were blocked by the courts, leaving the future of this plan uncertain.

If drugmakers do not meet the government’s expectations, the administration is prepared to explore additional measures, including importing drugs from countries with lower prices and implementing export restrictions.

Further, the order directs the US Federal Trade Commission to ramp up enforcement against what the government deems anti-competitive practices within the pharmaceutical industry.

Pharma shares

Following the announcement, shares of major pharmaceutical companies, including Pfizer, Amgen, and Merck & Co, surged by more than 3% as investors reacted to the news that drug prices may be cut by as much as 59% for sales within the United States.