by Rachel Cohrs Zhang, Derek Wallbank and Hadriana Lowenkron
President Donald Trump said he plans to order a cut in US prescription drug costs by mandating that Americans pay no more than people in countries that have the lowest price.
In a social media post, Trump said that he’ll sign an executive order at 9 a.m. Monday in Washington to institute what he called a most-favored nation policy. While he didn’t give details, shares in drugmakers across Asia tumbled on Monday as investors grappled with the potential implications for the world’s largest pharmaceutical market.
Trump said his plan would see the US “pay the same price as the Nation that pays the lowest price anywhere in the World.” While predicting that pharmaceutical prices could drop 30% to 80% in the US, Trump also said prices would likely “rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!”
Japanese drugmakers led a slump in shares. Chugai Pharmaceutical Co. plunged 11%, the biggest one-day loss in 14 years. Daiichi Sankyo Co. dropped 8.1%, the most since September and Takeda Pharmaceutical Co. lost more than 5%. In South Korea, Celltrion Inc. and Samsung Biologics Co. fell more than 4%.
Meanwhile, the Hong Kong-listed shares of BeiGene Ltd., which earns most of its revenue in the US, tumbled 10%. China’s largest pharma company, Jiangsu Hengrui Pharmaceuticals Co., was also swept up in the selloff, falling more than 4% despite not currently marketing any medicines in the US. In Mumbai, Sun Pharmaceuticals Industries Ltd., which gets about 33% of its sales from the US and is India’s largest drugmaker, slumped as much as 7% before paring losses.
Americans pay the most in the world for medicines, fueling 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.
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 already negotiates prices for some of the highest-cost medicines used in Medicare health insurance 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 haven’t included physician-administered drugs, but the next round might.
Trump’s Truth Social post — preceded by an earlier one that promised “one of the most important and impactful” posts he has ever issued — didn’t offer specifics on the order.
He also didn’t outline potential limits on the policy, such as whether it would apply only to government programs 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.
While it’s still unclear which drug companies will be affected by the executive order, investors are most worried about blockbuster drugs in Medicare Part-B and drugs serving large Medicaid populations, according to Jared Holz, a health-care strategist at Mizuho Securities USA LLC.
Billionaire hedge fund manager Bill Ackman suggested 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, Trump proposed a Medicare pilot program 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 hadn’t properly carried out the rulemaking process. The Biden administration didn’t appeal that finding, and instead pursued legislation that led to the Inflation Reduction Act.
The latest proposal may also face difficulties, according to analysts.
“There is no easy way forward, as the executive order needs to be passed by the Senate to become legislation,” Cui Cui, an analyst at Jefferies, wrote in a note. The plan is expected to face pushback from both the Senate as well as the industry, she wrote.
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