Donald Trump has promised to use his executive powers to cut the price of prescription drugs in the US in an attempt to bring them more in line with other countries, triggering a sharp fall in drugmakers’ share prices.
The US president has said he will sign an order on Monday that will reduce prescription drug and pharmaceutical prices “almost immediately” by “30% to 80%”.
Writing on Truth Social, his social media platform, Trump said on Sunday it was “difficult to explain and very embarrassing” why drug prices in the US were higher compared with many other countries.
“The Pharmaceutical/Drug Companies would say, for years, that it was Research and Development Costs, and that all of these costs were, and would be, for no reason whatsoever, borne by the ‘suckers’ of America, ALONE,” he wrote.
He said he would introduce a “most favoured nation” policy whereby the US pays “the same price as the nation that pays the lowest price anywhere in the World”.
The comments triggered a sell-off in pharmaceutical stocks on Monday amid worries profits could be hit if firms have to cut prices in the US.
In London, shares in the pharmaceutical companies AstraZeneca and GSK fell in early trading by as much as 5% and 3.2% respectively. Shares in Denmark’s Novo Nordisk which makes the weight loss and anti-diabetes drugs Wegovy and Ozempic, dropped by 7.5% in Copenhagen, while the Swiss group Roche Holdings fell by 3.6%.
In South Korea, shares in SK Biopharmaceuticals and Samsung Biologics fell by 2.1% and 4.7% respectively. In Hong Kong, the cancer drug maker BeiGene dropped by nearly 9% and Innovent Biologics fell by 5.7%.
In Japan, the pharmaceutical sector index fell by more than 4%, while Indian pharma stocks also dropped.
Alex Schriver, a senior vice-president at Pharmaceutical Research and Manufacturers of America, said: “Government price-setting in any form is bad for American patients. At a time when we are facing growing competition from China, policymakers should focus on fixing the flaws in the US system, not importing failed policies from abroad.”
European drugmakers have been urging the EU to allow higher medicine prices, warning that without stronger investment incentives, Europe would fall further behind the US.
Threats of US tariffs on pharmaceutical products have prompted a number of firms to announce manufacturing investments in the country, including Switzerland’s Novartis and Roche, and the US firms Johnson & Johnson and Gilead Sciences. Trump has hinted at a reprieve for companies, saying they would be given “a lot of time” to shift operations to the US before facing levies.
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Trump targeted high drug costs during his first administration, which aimed to cap prices for certain medicines under Medicare. However, the move was struck down in federal court after a challenge from drug companies.
The American government already negotiates prices for some of the most expensive medicines used in Medicare, a federal health insurance programme, under Joe Biden’s Inflation Reduction Act. Medicare covers 66 million Americans, mostly aged 65 or over.
Trump did not specify on Sunday whether his executive order would apply to Medicare, Medicaid or other government health programmes.
He suggested that industry lobbyists had been unsuccessful in the White House despite the fact that big pharmaceutical companies and industry bodies had made donations to his inauguration.
“Campaign Contributions can do wonders, but not with me, and not with the Republican party. We are going to do the right thing, something that the Democrats have fought for many years,” he said.
