United States President Donald Trump signed an executive order today that gives drugmakers 30 days to lower the prices of prescription drugs in the United States or face government restrictions, meaning less federal funding to cover the costs of those drugs.
The executive order calls on the Department of Health and Human Services, headed by Robert F. Kennedy Jr., to negotiate new, lower prices for prescription drugs.
If such an agreement is not reached, a new rule will come into effect, which will link the price of drugs in the US to the lower prices paid for them in other countries.
"We're going to level things out," Trump said at a news conference held this morning local time. "We're all going to pay the same. We're going to pay what Europe pays."
It is unclear whether and how the Republican president's order will affect millions of Americans who have private health insurance. The US federal government has the most power to influence the prices of drugs covered by the federal Medicare and Medicaid programs.
The U.S. government spends billions of dollars annually on prescription drugs, injectables, transfusions, and other medications covered by Medicare for about 70 million Americans. Medicaid, in turn, covers the costs of these drugs for about 80 million poor Americans and those with special needs.
Ahead of the signing of the regulation, the president of PhRMA, the largest pharmaceutical lobby group in the US, railed against Trump's plan, calling it "a bad deal for American patients."
"By introducing foreign prices, Medicare will be cut by millions of dollars, and there is no guarantee that it will help patients and improve their access to medicines. It (the regulation) threatens the hundreds of billions of dollars that our member companies plan to invest in America, and makes us more dependent on China for innovative medicine," said PhRMA President Stephen J. Able.
Trump's favored approach to drug pricing through Medicare boils down to the "most favored nation" approach, which was controversial even when it was first implemented during Trump's first term as president.
In fact, in the final weeks of his first presidency, he signed a similar executive order calling on the US to pay lower prices for a number of prescription drugs, the same as those paid by other countries. That narrowly worded regulation encountered obstacles, and a federal court blocked it, so it did not even take effect during the administration of Democratic President Joseph Biden.
The pharmaceutical industry has criticized Trump's 2020 executive order as giving foreign governments an advantage when deciding drug prices in the US.
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