President Trump signed a decree on Monday asking to ask drug manufacturers to voluntarily reduce key medication prices in the United States.
But the order does not cite any obvious legal authority to require lower prices. The ordinance said that the administration is considering taking regulatory measures or importing drugs from other countries in the future if drug manufacturers do not comply.
It was in a way a victory for the pharmaceutical industry, which was weakened for a policy which would be much more detrimental to its interests.
Trump, Trump said on Sunday evening, said in a social position that he would bind American drug prices to those of peer countries in the context of a “most favored” pricing model, a policy he tried without success during his first mandate for a small set of medication in Medicare. His Monday decree does not do that. Pharmaceutical actions increased on Monday morning to the news.
Trump’s decree intervened just a few hours after the House Republicans offered a large set of health care changes that would reduce about $ 700 billion in Medicaid and Obamacare markets for a decade and would lead to approximately 8.6 million uninsured Americans. The Congress refused to include all provisions to directly limit the prices of medicines in this package.
The executive decree also called on federal agencies to investigate the reasons why European countries reduce prices and push them to pay more. The Trump administration has a limited lever effect to increase prices in Europe.
“I do not hit pharmaceutical companies,” Trump said little time on Monday before signing the prescription. “I really hit countries more than pharmaceutical companies.”
Thanks to his decree, Trump chose not to offer measures that could have had more teeth, such as the call for his administration to work with the congress on legislation or the drafting of regulations to modify the way in which government health programs pay for certain drugs.
Many Republican legislators oppose regulations on medication prices, but Trump has long made his words against the current system, in which pharmaceutical companies charge highly higher prices in the United States than the rest of the world.
During the event on Monday, Trump led his anger to European governments which negotiated lower prices.
“We are going to help pharmaceutical companies with other nations,” he said.
Trump threatened to use trade policy to push European countries to pay more for prescription drugs. But pharmaceutical companies are already locked in contracts with governments, and if they are trying to charge more for new drugs, European countries can go back to cover them.
During his first mandate, Trump tried in vain to promulgate a more substantial police force to reduce the prices of medication for Medicare, the health insurance program which covers 68 million Americans who are over 65 years old or have a handicap. This plan would only have applied 50 drugs, administered in clinics and hospitals, which are paid by Medicare. A federal court blocked it, judging that the administration had jumped stages in the process of policies.
Some experts have said that the policy could have been adopted legal if it had been pursued by the book, and others said that he would have needed the Congress to adopt a law.
The decree of Monday, at first glance, calls for changes to a much larger number of drugs, and for all Americans, not only patients insured by Medicare. But it has no clear mechanism to adopt price reductions.
The prescription said that if initial actions did not make enough progress to reduce the prices of American medicines, the Trump administration can “offer a regulatory plan to impose the most favored prices”.
Democrats have introduced numerous bills to bring American prices closer to those of foreign peers, and the legislation adopted during Biden administration allows Medicare to negotiate directly on the price of a limited set of drugs used in the program. In general, the policies that would reduce the prices of drugs are very popular among republican and democrats voters.
The pharmaceutical industry has also prepared to punish prices on imported drugs, which Trump has sworn to impose soon. Trump recently said that he was planning an announcement on pharmaceutical prices this month. Prices would most likely increase certain prices of medicines in the United States and reduces the benefits of drug manufacturers, even if they can transmit some of the additional costs.
Pharmaceutical investors have been relieved that Mr. Trump did not propose the most substantial policy he had threatened. After lowering prior exchanges, pharmaceutical actions rebounded when the details of Mr. Trump’s decision became clear. Merck’s stock increased 5% on Monday morning. Pfizer increased by 3%. An index of smaller biotechnology actions increased by 3%.
“Better than feared,” wrote Wall Street’s bank analysts, Jefferies in a note to investors.
In statements on Monday, lobbying groups for drug manufacturers have said that the United States should not turn to other countries for how much they pay for drugs.
But the main group of industry, Phrma, applauded Trump for threatening to use commercial negotiations to push foreign governments “to pay their fair share for drugs”.
“American patients should not defend the invoice for global innovation,” said Stephen J. Ubl, Managing Director of Phrma.
Brand drug prices in the United States are three times higher, on average, on average than those of peer nations.
It is despite the fact that a large part of the research leads to new drugs is taking place in American laboratories and hospitals.
Medicines manufacturers generate a substantial majority of their global profits from sales in the United States and generally design their commercial strategy on the American market.
Pharmaceutical companies argue that higher prices in the United States are available with additional advantages: industry-funded analyzes have revealed that patients in the United States obtain medication more quickly and with less insurance restrictions than other countries.
In other rich countries, the government generally pays prescription drugs for the entire population, trading substantial discounts of drug manufacturers. Many other nations make their own comparisons with prices in peers to help determine what they are ready to pay.
But in the United States, the government has very little formal involvement in setting medication prices, other than the Biden era program for a limited number of medication in medication. The Trump administration now oversees this program.
This month, Senator Josh Hawley, a Missouri republican, and Senator Peter Welch, a Democrat in Vermont, presented a bill that would limit the prices of medicines in the United States to an average prices paid by a group of homologous countries.
In an interview, Mr. Welch said he agreed with Trump that Americans too paid for drugs and that international comparisons could help set more equitable prices. But he thinks that Congress must tackle the problem to ensure sustainable policy.
“It is really important to do so legislative,” he said.
