Trump unveils plan to lower prescription drug prices

President Trump yesterday signed an executive order aimed at lowering the cost of prescription drugs in the US. To do so, Trump aims to align what the US government pays for certain medications to significantly lower prices paid by other developed nations.

Trump's executive order specifically directs the US Trade Representative and Commerce Department to take any appropriate action against “unreasonable and discriminatory policies in foreign countries” that suppress drug prices.

• It also orders Health Secretary RFK Jr. to work with pharmaceutical companies on how to sell their drugs directly to US patients at "the most-favored-nation price"—meaning rates for Americans would be set at the lowest available international price.
• If US drug prices aren’t lowered within 180 days, RFK Jr. is authorized to “propose a rulemaking plan” to implement most-favored-nation pricing.

The order carries bipartisan support. Several Democratic lawmakers expressed approval for Trump’s plan to lower drug prices. Rep. Ro Khanna (D-CA) said he would introduce the executive order to become legislation, while Sen. Bernie Sanders (I-VT) proposed a similar legislative effort.

But…Some Wall Street analysts and legal experts say Trump’s plan faces a challenging path to becoming a reality. In a note on Monday, JPMorgan analysts called the policy “challenging to practically implement” because it would likely require congressional approval and could run into legal hurdles.

• Monday’s executive order also resembles an effort by Trump to lower prescription drug prices during his first term, which was blocked by a federal judge who ruled his administration had skipped steps in the policymaking process.

Big picture: US prescription drug prices are currently two to three times higher on average than those in other developed nations. Many experts attribute this to other developed countries having single-payer healthcare systems with leverage to negotiate better deals, while the US has a patchwork of public and private insurance and partly relies on middlemen to set prices.