Trump Demands 90% Drug Price Cuts, Threatens Tariffs on Big Pharma

US President Donald Trump has signed a far-reaching executive order that calls on drug companies to reduce prices on medications to match those in other advanced nations. The order seeks to alleviate one of the greatest costs for American consumers: the cost of prescription drugs. Trump called for cuts of as much as 90%, issuing threats of tariffs and other sanctions if drugmakers do not report “substantial progress” within 30 days.

The action is in accordance with his wider election campaign promise to battle inflation and reduce everyday expenses. Nonetheless, experts in law and commentators predict hiccups in implementing the change, and already, the pharma sector has opposed it.

Trump Calls for Global Price Parity

Speaking at a press conference, Trump stressed fairness. “Everybody should equalize. Everybody should pay the same price,” he said. He used the example of a friend purchasing a weight-loss injection in London for $88, as opposed to $1,300 in the US, to highlight the disparity.

The United States has the world’s highest prices for prescription drugs. Trump’s order aims to correct this through price matching and direct-to-consumer import initiatives that distribute drugs at international levels. In case of non-compliance by companies, the government will exercise rulemaking to enforce additional measures, such as export limitations and direct imports from other countries.

Industry Slams the Move as Risky

Industry groups that represent drugmakers, such as PhRMA, quickly condemned the order. CEO Stephen Ubl said it would “jeopardize” future treatments and investment in the US.  He attributed high US prices to foreign countries not paying their fair share and to middlemen who drive up costs.

Pharma stocks, which initially fell, recovered after investors saw the order was not as draconian as feared. Merck, Pfizer, Gilead, and Eli Lilly shares all closed higher on Monday.

Legal Experts Anticipate a Flood of Lawsuits

Health law experts think this executive order will probably spur significant legal challenges. Health policy lawyer Paul Kim stated the importation plans go beyond what U.S. law permits. Georgetown professor Lawrence Gostin predicted a “flood of litigation” when the order has actual consequences for companies.

The order also directs the Federal Trade Commission (FTC) to crack down on anti-competitive behavior, such as pay-for-delay arrangements that keep cheaper generics off the market. The FTC reaffirmed its commitment to being a “proud partner” in this cause.

Difficult Path Ahead

Desppite the aggressive rhetoric, commentators view implementation as a significant hurdle. Trump himself had suggested parallel steps in the first term and was thwarted by the judiciary. BMO Capital analyst Evan Seigerman said, “Implementing something like this is pretty challenging.”

The call of the order for Commerce Department action on exports adds another twist, though authorities have not reacted yet.

In the end, Trump’s executive order is a splashy action designed to rein in the costs of drugs. But if it works, or if it collapses in judicial gridlock, remains to be seen.