President Trump’s strategy to lower prescription drug prices will be put to the test as drugmakers must now commit to the terms of his “Most Favored Nation” pricing plan or face unspecified actions from the federal government.
Trump gave drugmakers until Sept. 29 to respond to his Executive Order “Reducing Drug Prices for Americans and Taxpayers.”
The order calls on manufacturers to provide preferential pricing to all Medicaid patients, requires that they not give better prices to other developed countries on new drugs, create a way to sell directly to consumers and use trade policy to raise prices internationally so that revenue is reinvested into lowering American prices.
“Moving forward, the only thing I will accept from drug manufacturers is a commitment that provides American families immediate relief from the vastly inflated drug prices and an end to the free ride of American innovation by European and other developed nations,” Trump wrote to the drugmakers.
Should they refuse to engage, the order says the federal government will “deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.”
Trump sent letters to: AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, EMD Serono, Genentech, Gilead, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron and Sanofi.
How drug companies have responded so far
The Hill has reached out to all 17 companies named by the Trump administration for comment.
Some of the companies appear to have already taken steps to align with the executive order, with drugmakers like Eli Lilly, Novo Nordisk, Bristol Myers Squibb and Pfizer launching direct-to-consumer programs for some of their most in-demand drugs.
Earlier this month, Bristol Myers Squibb said it would be launching its new schizophrenia medication Cobenfy in the U.K. at the same list price as in the U.S., shortly before the Food and Drug Administration announced it had approved the drug, seemingly a nod to the White House’s demands that new drugs approved domestically not be sold for cheaper abroad.
When reached for comment, EMD Serono said in a statement, “Our priority is to ensure that patients worldwide continue to benefit from our innovations without disruption. We are in close contact with the U.S. administration and will share more information in due course.”
Merck said it “supports raising foreign prices and lowering U.S. prices, and we are committed to working with the Administration to achieve a better balance while preserving American leadership in biopharmaceutical innovation.”
Novo Nordisk also said it was in discussions with the administration about the order, adding, “We remain focused on improving patient access and affordability, and we will continue to work to find solutions that help people access the medication they need.”
Steve Ubl, the president and chief executive of the pharmaceutical trade group PhRMA, announced the launch of a new portal called AmericasMedicines.com on Monday that will connect patients with manufacturers’ direct-to-consumer programs.
“With insurance costs rising and coverage narrowing, patient assistance resources are needed more than ever. They help fill gaps in insurance coverage, extending a lifeline to millions of people,” Ubl wrote in an op-ed published by The Washington Post.
Among the companies listed on the website are Amgen, AstraZeneca. Bristol Myers Squibb, Genentech, Gilead, GSK, Johnson & Johnson, Eli Lilly, Merck and Novartis.
Trump ramps up threat of pharmaceutical tariffs
This deadline comes just days after Trump launched another pharmaceutical price control initiative, a new 100 percent tariff on pharmaceutical products made by companies that are not currently in the process of building manufacturing plants on U.S. soil.
This new tariff rule is set to go into effect on Oct. 1.
Like with the HHS rule issued last week, finer details have yet to be released regarding this tariff plan. However, industry experts predicted the tariffs could also be used for leverage with drugmakers to drive down prices.
Pre-existing trade deals, like those reached with the European Union, are expected to preclude many countries from the new tariff requirement.
“The devil is in the details on this one,” Monica Gorman, managing director at Crowell Global Advisors and former special assistant to former President Biden for manufacturing and industrial policy, told The Hill.
“Though, it does look like the President is considering some sort of exemptions for companies that are building new factories in the United States. How on earth do you enforce that? How do you make sure that that is clear at the time of import?” she added.
Gorman noted that the Harmonized Tariff Schedule codes don’t differentiate between branded and generic drugs.
White House reviewing ‘global benchmark’ plan
Shortly before the deadline for companies to respond, the Trump administration unveiled a new rule under the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services.
The rule was titled the “global benchmark for efficient drug pricing (GLOBE) model,” with no other details yet provided. Two drugmaker lobbyists told Reuters that the rule is likely to echo Trump’s 2020 rule that tied Most Favored Nation pricing to 50 drugs paid for by Medicare.
The Trump administration predicted at the time that the plan could save Medicaid patients nearly $30 billion in out-of-pocket costs over seven years.
However, the second Trump administration has so far preferred a voluntary approach to lowering drug prices.
In a July op-ed in the Wall Street Journal, FDA Commissioner Marty Makary and CMS Administrator Mehmet Oz touted the federal government’s “convening authority.”
“Working with industry is the best place to start. And we believe in industry to do the right thing when called upon,” they wrote.
Our agencies are in a strong position to show Americans which companies are doing the right thing when it comes to popular reforms. By the time we’re done, we will have built new relationships and be better positioned to hold them accountable.
