Drug companies were nervously awaiting President Donald Trump's announcement on pharmaceutical tariffs, but instead, he signed a "better than feared" executive order on Monday. According to The New York Times, Trump wants US drug companies to voluntarily reduce US prices.
Despite having no real legal authority to enact this, the executive order did say that if drugmakers do not lower US prices, the Trump administration would consider imposing regulations or importing drugs from other countries.Â
On Sunday, Trump stated in a Truth Social post that he would employ a "most favored nation's policy," in which the US will pay the same price as the nation that pays the lowest price. This caused pharmaceutical stocks to go up on Monday morning.Â
"I'm not knocking the drug companies," Trump said, per The Times. "I'm really more knocking the countries than the drug companies."
With this in mind, the executive order also asks federal agencies to look into why European countries have lower prices. Trump said he would use trade policy to get these countries to pay more. However, since drugmakers already have contracts with these governments, it's not clear how this would be enforced.Â
According to pharmaceutical companies, higher drug prices in the US allow people to get their prescriptions faster and with fewer insurance restrictions.Â
"Most favored nation is a deeply flawed proposal that would devastate our nation's small and mid-size biotech companies, the very companies that are the leading drivers of medical innovation in the United States and the cornerstone of America's biotechnology leadership," John F. Crowley, CEO of the Biotechnology Innovation Organization, said in a statement.
On the other hand, The Times reports that Stephen J. Ubl, chief executive of PhRMA, a US trade group representing pharmaceutical companies, stated, "US patients should not foot the bill for global innovation," and that foreign governments should have "to pay their fair share for medicines."
Only time will tell how and if this executive order will be enacted and whether US drug companies will voluntarily lower their prices for American patients. In the meantime, we will be waiting for Trump's pharmaceutical tariff announcement.
