Donald Trump has made a new promise to the Americans, creating havoc among the pharma companies. On Sunday, the US President announced that he would sign an executive order to cut prices of prescription drugs to match up with the prices of other high-income countries.
In his post on Truth Social, Trump highlighted the fact that for the last many decades, Americans have been paying much higher prices for prescription drugs and pharmaceuticals in comparison to other nations. He stated that it’s “embarrassing” that Americans pay “five to ten times more” for “the same drug, manufactured in the same exact laboratory or plant, by the same company.”
Calling out the Pharma companies for the massive differentiation in prices, Trump said, “The Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the “suckers” of America, ALONE.”
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Trump announced that on Monday, May 12, he will “be signing one of the most consequential Executive Orders in our Country’s history” in the White House at 9 am.
In the historic announcement, Trump said that the prices of prescription drugs would be reduced “almost immediately by 30% to 80%.” He then claimed that the prices of drugs will eventually rise throughout the world.
“I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World. Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before.” Trump wrote in his Truth Social post.
With this huge step, the United States will save “Trillions of dollars,” Trump said.
During his first term, Donald Trump signed an executive order aimed to reduce drug prices. However, it was halted by a federal judge after the pharma companies filed a lawsuit. However, this time, Trump seems to be ready for any hurdles that may come his way.
Trump’s announcement has witnessed a major impact on pharmaceutical stocks. Shares in Novo Nordisk, which is listed in Frankfurt, dropped by 7.5%, while in London, AstraZeneca and GSK fell in early trading by as much as 5% and 2.6%, respectively. Shares of Sun Pharma were down by 5%.
Trump’s order to bring down prices of prescribed drugs will be a big relief to Americans who have been suffering due to costly healthcare for decades. The reason behind the high prices of drugs in America is because of the absence of national price controls, explained Business Standard.
In most of the developed countries, the government negotiates and regulates the prices of drugs, while in the US, the prices are set by pharma companies and are negotiated by private insurers. Pharma companies defend their higher pricing in the US by citing high cost of R&D but continue to report profits in billions. The same companies also sell the very same drugs for far cheaper prices in Europe and other parts of the world where the prices are centrally negotiated, as per a 2024 report from Harvard Health Publishing.
