Trump issues sweeping executive order to reduce drug prices
President Donald Trump issued an executive order Monday pertaining to the cost of pharmaceutical drugs, directing federal agencies to get prices in the U.S. on par with those seen in other nations, mainly those in Europe.
The policy known as “most favored nation” would empower the Department of Health and Human Services (HHS) to develop trade deals that reimport drugs for lower prices than Americans are used to paying, with Trump saying on social media the order will reduce the price consumer pay “almost immediately, by 30% to 80%.”
The order sets policy for any agency involved in trade, the stated goal being to end the current established norm where Americans pay more for drugs, so that in—where health programs regulate prices more strictly—drug companies can afford to charge less, without taking a hit to their profits.
“Starting today, the United States will no longer subsidize the healthcare of foreign countries,” Trump told reporters from the White House on Monday when he signed the order. “We were subsidizing other countries, countries where they pay a small fraction [of what we pay].”
The order gives federal agencies 30 days to develop a workable plan, which would then ideally be finalized. However, given that there are likely to be challenges in court to the order, it remains to be seen what, if anything, will actually be implemented.
Courts issued injunctions during Trump's first term
Courts put an end to a similar move during Trump’s first term that tied Medicare drug prices to the lowest cost paid by nations that are members of the Organization for Economic Co-operation and Development—a coalition of 38 countries that establish trade deals globally.
In the challenges brought by drug companies, courts seemed sympathetic to the idea that powers to control prices are reserved for Congress and cannot be done by an executive order from the president. It’s unclear if challenges this time will have different results.
However, Congressman Ro Khanna (D-Cali.) was quick to respond to the order with his own proposal, which he said would mirror the language of the order and solidify the rule into law. Khanna said on Monday he is seeking a Republican co-sponsor to move the bill forward. It has yet to be officially brought to the floor for initial introduction.
Politico reported that Trump had tried to get Congress to include pharmaceutical price parity in its upcoming federal budget bill. However, attempts to do so were unsuccessful.
Stock prices from some of the largest drug companies, including Johnson & Johnson, Pfizer and Merck seemed unfazed by the news, with little fluctuation on the day. Merck was up 5% from market open to close.
The full text of the White House executive order can be read here.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.