- President Donald Trump is demanding that pharmaceutical manufacturers reduce their prices.
- Seventeen drug companies received a letter regarding disparities in U.S. drug prices compared to other nations.
- The most-favored nation policy urges manufacturers to charge the lowest prices offered in other developed nations.
President Donald Trump is pushing pharmaceutical manufacturers to reduce prescription drug prices in the U.S. to the lowest prices offered in other developed nations. And he’s pushing hard.
That price is called the most-favored-nation price. And Trump sent the CEOs of 17 different pharmaceutical companies a letter Thursday that warned if they “refuse to step up,” the federal government will take action and “deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.”
According to a White House announcement, the letters were sent 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.
The notice quoted Trump: “In case after case, our citizens pay massively higher prices than other nations pay for the same exact pill, from the same factory, effectively subsidizing socialism abroad with skyrocketing prices at home. So we would spend tremendous amounts of money in order to provide inexpensive drugs to another country. And when I say the price is different, you can see some examples where the price is beyond anything — four times, five times different.”
The letters outline steps the pharmaceutical companies “must take,” including:
- Providing most-favored-nation prices to each and every Medicaid patient.
- Stipulating they will not give other developed nations better prices for new drugs than those offered in the U.S.
- Providing manufacturers with a path to eliminate middlemen and sell medications directly to patients, as long as they sell them for no more than the best price available in developed nations.
- Using trade policy to support manufacturers in raising their prices internationally “provided that increased revenues abroad are reinvested directly into lowering prices for American patients and taxpayers.”
Reuters reported the president has set a deadline of Sept. 29 for the drug companies to “respond with binding commitments to those terms.”
Ending ‘global freeloading’
The government notice said the letters represent “decisive action to rebalance a system that allows pharmaceutical manufacturers to offer low prices to other wealthy nations while charging Americans significantly higher prices.”
It notes that recent data suggest Americans pay three times more for brand-name drugs than the prices other Organization for Economic Cooperation and Development countries pay, even with U.S.-focused discounts from the pharmaceutical companies.
While the U.S. has fewer than 5% of the world’s population, the administration said, about three-fourths of global pharmaceutical profits comes from the pockets of American taxpayers.
The notice also points out that drug manufacturers receive “generous research subsidies” and “enormous health care spending” by the government. But the benefit doesn’t pass through to U.S. consumers. Instead, drugs are discounted abroad to reach foreign markets, subsidized by higher prices paid by U.S. consumers.
Putting U.S. patients first
The letters are the latest step in “President Trump’s work to get Americans the best deal in the world on prescription drugs,” the notice said.
Among other steps heralded by the White House:
Trump signed an Executive Order May 12 directing the administration to take action to bring drug prices charged in the U.S. in line with those paid by similar countries. As Deseret News reported at the time, he gave the drug companies 30 days to work with the U.S. Department of Health and Human Services to lower costs.
After that, the administration had discussions with drug companies to discuss most-favored-nation pricing. “Today’s letters indicate that industry proposals have fallen short and from this point forward, President Trump will only accept from drug manufacturers a commitment that provides American families immediate relief from vastly inflated drug prices and an end to the free-riding by European and other developed nations on American innovations,” the notice said.