Trump drug price order puts new pressure on pharma

• The order will focus on lowering prices for drugs with the highest cost disparities between the U.S. and other developed nations, most of which have government-run health systems. GLP-1 prices are expected to come down as a result, a White House official told reporters.

State of play: The order directs HHS to set targets for drug price reductions for publicly insured health programs and private markets in the United States within 30 days, kicking off a round of negotiations between the government and industry.

• If the talks don't yield enough progress, HHS would then implement a "Most Favored Nation" policy via rulemaking and look into other policy levers that could bring prices down for federal and commercial payers, the official said.
• "Big Pharma will either abide by this principle voluntarily or we'll use the power of the federal government to ensure that we are paying the same price as other countries to accelerate these price restrictions and reductions," Trump said during a press conference Monday.

Zoom in: HHS will also facilitate direct-to-consumer pharmaceutical sales at Most Favored Nation prices.

• The U.S. Trade Representative and the Commerce Department will be directed to take action against "unreasonable and discriminatory policies" in other countries that keep prices lower abroad. The executive order does not specify how the officials will do this.
• Meanwhile, the Justice Department and Federal Trade Commission will also work to stop purported anti-competitive actions that the official said keep prices high in the U.S.

The administration expects the U.S., as the largest purchaser of pharmaceuticals, to get the best deal across the world, the official said.

• But cracking down on other countries' "unfair and discriminatory practices" will have the effect of increasing prices abroad and provide additional revenues for pharmaceutical companies, the official added.

Between the lines: The drug pricing action is as much about sticking it to the European Union and other countries that set lower drug prices for their citizens as it is about going after the pharmaceutical industry.

• Trump said his initiative will force other countries to pay higher prices for pharmaceuticals, which should in turn lower the proportion of research and development costs borne by American consumers.
• "Starting today, the United States will no longer subsidize the health care of foreign countries ... and we'll no longer tolerate profiteering and price gouging from Big Pharma," Trump said during a press conference.
• "I think the healthcare companies should make pretty much the same money. I really don't believe they should be affected very much, because it's just a redistribution of wealth," he said. "Europe's gonna have to pay a little bit more. The rest of the world's gonna have to pay a little bit more. America is gonna pay a lot less."

What they're saying: "To lower costs for Americans, we need to address the real reasons U.S. prices are higher: foreign countries not paying their fair share and middlemen driving up prices for U.S. patients," Pharmaceutical Research and Manufacturers of America president Stephen Ubl said in a statement.

• "The Administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines. U.S. patients should not foot the bill for global innovation."

Trump also took a hit at former President Biden's trademark policy that allowed the government to negotiate lower drug prices for Medicare, which kicked off last year. He argued the first round of negotiated prices are still too high compared to what other countries pay for the products.

• "Joe Biden's plan was ... a very big failure," Trump said.
• The Trump administration has said it plans to continue the Medicare negotiation program, but with so far unspecified changes.

What to watch: It's unclear how this policy will intersect with threatened pharmaceutical tariffs. A Commerce Department investigation into how pharmaceutical imports affect national security is ongoing, the official said.

• Shares of pharmaceutical stocks fell Monday ahead of Trump signing the order.

Editor's note: This story has been updated with additional details.