President Donald Trump vowed to force European countries to pay higher drug prices while squeezing pharmaceutical companies to cut prices for U.S. consumers by up to 80%.
Speaking at the White House on Monday, Trump said his administration would punish countries that refuse to "balance" its drug prices with the United States or "ranspell" pharmaceutical companies to lower its allegations.
Threats include imposing trade sanctions on non-cooperating countries, which opened up new conflicts with U.S. trading partners after Trump imposed “liberation day” tariffs worldwide last month.
“We will tell those countries like the EU representative that the competition has begun, I’m sorry,,,,,Trump said. “If they want to be cute, then they don’t have to sell cars to the United States anymore.”
Trump signed an executive order on Monday, with the White House saying it would “communicate price targets to drugmakers” and allow patients to buy directly from drugmakers, thus cutting “middleman.”
The president hopes to lower the price of medicines in the United States to the lowest available globally. Historically, American patients have had much higher drug prices than their peers in other industrialized countries.
Trump’s instructions could hurt U.S. pharmaceutical companies that have lobbyed for years to maintain U.S. pricing systems. Trump proposed price controls on drugs during his first term, but this was defeated in court. Democrats are also trying to control drug costs. Analysts said Monday that Trump's latest proposal faces a similar struggle.
Trump said the price premium of U.S. drugs means Americans pay an inappropriate share of the R&D costs of pharmaceutical companies.
He said the U.S. Trade Representative and the Commerce Department would be directed to investigate the country to range “ranspell drug companies and their dollar amounts are very low unless they accept their products.”.
"This means that American patients effectively subsidize Germany's socialist healthcare system everywhere in the EU - they're the hardest. They hate it." "Basically, what we're doing is equal."
Unlike in Europe, U.S. government-backed insurance plans cannot negotiate prices for certain drugs with pharmaceutical companies. Former President Joe Biden's inflation reduction bill allows seniors' public insurance program Medicare to do it for the first time for certain drugs.
According to a study by Rand Healthcare for the National Department of Health and Human Services, the United States pays 3.2 times more for branded drugs than other developed countries in 2022.
Trump's announcement has fought the pharmaceutical industry. The biotechnology innovation group of the American lobby said Trump's plan is similar to "imported social medicine."
“Patients and families are not bargaining chips in the trade war, but that’s exactly how they are treated,” it said on Monday.
Shares of US pharmaceutical companies rose, and stock index returns higher.