Drug company stocks drop following Trump's price warning
President Trump Pushes for Lower Drug Prices with Executive Order
In a continued effort to address the high cost of medicine in the United States, President Donald Trump has taken action against pharmaceutical companies with an executive order signed in May. The order aims to provide relief to American families from high medicine costs.
Trump has issued letters to 17 major pharmaceutical companies, demanding they commit to a "most favored nation" (MFN) pricing policy, setting US drug prices at the lowest levels offered in comparable OECD countries. The companies have a 60-day deadline to make binding commitments, including repatriating increased revenues to lower prices and making direct purchasing available for high-volume drugs at MFN prices.
The pharmaceutical industry has not taken the news lightly. Shares in Novo Nordisk dropped 4.5% due to a threat by President Trump regarding medicine prices in the US. Sanofi fell 1.1% in Paris, AstraZeneca fell 2.8% in London, and shares in Novartis shed 0.9% and Roche 1.0% after Trump announced Swiss goods will face a 39% tariff.
The administration has not clearly detailed the exact legal or regulatory enforcement mechanisms or penalties that will be used if companies refuse to comply. However, the threats remain broad and encompass "every tool," which can imply a range of government actions from regulatory restrictions, revised reimbursement policies, to tariff impositions on pharmaceutical products.
Despite the lack of concrete, publicly detailed enforcement measures, the government signals strong intent to act decisively if companies do not cooperate. President Trump has threatened to use every tool in his arsenal to protect American families from high drug prices. He has not specified the consequences for pharmaceutical firms that refuse to lower prices.
The White House has emphasized that US drug pricing practices are abusive and that the executive order is a continuation of efforts to address high drug prices in the US. Trump moved to give Americans relief from medicine costs much higher than elsewhere in the world.
Trump's letters to the 17 drug companies were published on Truth Social, and he has told major pharmaceutical firms to lower prices or face punishment. The consequences, while serious, lack concrete, publicly detailed enforcement measures, but the government's strong stance suggests a willingness to act forcefully if necessary.
- The health-and-wellness industry is under scrutiny due to the high cost of medicine, with President Trump advocating for lower prices through his executive order.
- The finance and business sectors are affected as well, given the potential impact on profits for pharmaceutical companies, should they commit to lowering drug prices.
- The science community is closely watching the developments in the industry, as the execution of these executive orders could lead to significant changes in the health and wellness landscape in the United States.
