US President Trump announces ‘equalisation’ policy for medicines prices in the US

U.S. President Donald Trump gestures during a press conference in the Roosevelt Room at the White House in Washington, D.C., U.S
| Photo Credit:
NATHAN HOWARD

The US will no longer subsidise the healthcare of foreign countries, said US President Donald Trump, announcing that he was seeking price cuts on medicines ranging from 59 per cent to 80/90 per cent.

Outlining his “equalisation” policy, President Trump said, “the US has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits.” The directive was not against drug companies but developed countries who set prices on pharmaceutical products lower than what it is sold in the US, he added. Trump also outlined the “Most favoured nation” policy, where US drug prices would be pegged at the lowest price it was sold in any other country.

Price parity

The latest move by the US President is directed at innovator companies, seeking price parity across developed markets, said an industry representative with the Indian pharmaceutical industry that exports drugs worth about $9 billion to the US. If the price on innovator drugs was indeed brought down, it could make the environment more competitive for generic drugs as well, said a pharmaceutical trade analyst, even as the implications the directive were being studied by the industry.

The Executive Order signed by Trump will see his administration communicate price targets to pharmaceutical manufacturers “to establish that America, the largest purchaser and funder of prescription drugs in the world, gets the best deal.” Additionally, the Secretary of Health and Human Services would establish a mechanism through which American patients would be able “to buy their drugs directly from manufacturers who sell to Americans at a “Most-Favored-Nation” price, bypassing middlemen,” a note from the White House said.

Innovator companies in the US including Pfizer, Eli Lilly, Merck, for example and European drugmakers including Roche, Novartis, Novo Nordisk – whose different prices on “fat shot drug” Ozempic” in the US and Europe was mentioned by Trump to illustrate his point — stand to be impacted by the latest policy.

A large part of India’s pharma exports are affordable generic drugs — off-patent medicines that are similar to an innovative medicine, but priced much lower. Indian drugmakers selling to the US, included Sun Pharma, Dr Reddy’s Glenmark, Lupin, Zydus etc. Companies in the specialty segment, building their innovative pipeline like Sun Pharma could be impacted if innovative product prices are revised downwards, industry watchers said.

Trump’s latest move to get better medicine prices in the US, comes even as the US administration puts in place a trade deal with China, besides a pending pharmaceuticals specific tariff announcement from the US President, in the next several days.