Trump plan to cut drug prices hits pharma stocks

Washington — US President Donald Trump plans to sign a wide-reaching executive order directing drugmakers to lower the prices of their medicines to align with what other countries pay.

White House officials said the government will give drugmakers price targets in the next 30 days, and will take further action to lower prices if those companies do not make “significant progress” towards those goals within six months of the order being signed.

Trump said on social media on Monday drug prices would be cut 59%. The estimate followed comments he made on Sunday that he would sign the order pursuing “most-favoured nation” pricing, resulting in cuts of 30% to 80%.

The White House officials did not specify any targets.

The executive order differed from what drugmakers had been expecting. Four lobbyist sources said they expected an executive order that called for “most-favoured nation” pricing on a subset of Medicare drugs.

Trump’s order also directs the government to consider facilitating direct-to-consumer purchasing programmes that would sell drugs at the prices other countries pay.

Shares of major US drugmakers AbbVie, Amgen , Pfizer, Eli Lilly and Merck fell between 2.2% and 3.7% in premarket trading.

Biotech companies were likely to trade down amid uncertainty around greater scrutiny and the pressure to lower drug pricing, said Jefferies analyst Michael Yee.

The US pays the highest prices for prescription drugs, often nearly three times more than other developed nations. Trump has pledged to close the gap, but has yet to outline how he will implement it.

“We await clarity on what Trump means by ‘almost immediately’ and which specific government programmes will be targeted,” Leerink Partners analyst David Risinger said .

Pharma stocks across Europe, the UK, Australia, India and Japan also declined.

Reuters