HEADS UP: DRUG PRICES DROPPING BY UP TO 80%?
- Trump's gonna slash prescription drug prices in the US by as much as 80%, rattling global pharmaceutical shares this Monday.
- With US drug prices nearly three times higher than abroad, this move could be a game-changer, especially with branded drugs skyrocketing past three times the average.
- In a late-night tweet, Trump revealed he'd be signing an executive order Monday morning, claiming it'd drop drug costs by 30%-80%.
Drug shares plummet following Trump's announcement of plans to reduce medication costs
Trump's upcoming executive order has been brewing some serious tension in the pharmaceutical industry.1 Being all about aligning U.S. drug prices with the cheapest rates paid by other nations, a move commonly known as Most-Favored-Nation (MFN) pricing, is what this order is all about.
Here's the brass tacks of how this prices circuit-breaker works:
- The MFN Pricing Machine: The order, once signed, requires the Secretary of Health and Human Services to create a system that lets American patients purchase prescriptions pillsstraight from manufacturers at the MFN price, skipping the middleman like pharmacy benefit managers. Bye-bye, extra fees! Hello, cost-savings.
- Manufacturers Under Pressure: The Trump Administration plans to set price targets for manufacturers to make sure the US nabs the best deals as the world's largest pharmaceutical buyer. Neglect that? Watch out, 'cause the Secretary of Health and Human Services is ready to propose strict regulations, even take drastic measures, to rein in drug prices and stomp out anticompetitive practices.
- Fair Trade Crackdown: The U.S. Trade Representative and Secretary of Commerce will be hopping on board to address unfair foreign practices that jack up U.S. drug prices. The goal? Put a stop to foreign market exploitation and get fair pricing for American consumers.2
- Price Drop Extravaganza: Applying the MFN pricing concept could slash drug prices by up to 80%, making U.S. drug costs more on par with other developed nations that pay substantially less for the same meds.3
GLOBAL PHARMACEUTICAL SHARES: WEATHERING THE STORM?
This mighty prospective price drop threatens major repercussions for global pharmaceutical companies:
- Stocks Taking a Hit: With Trump's executive order already causing drug stock values to plummet, it's clear investors fear that profit margins in the lucrative U.S. market could take a nose-dive.1
- Uncertainty Rules: Manufacturers are bracing for potential future price regulations in the U.S., chunking up revenue and profitability. This uncertainty doesn't exactly spark a positive outlook among investors, considering the U.S. market is a top source of revenue for these companies.1
- Global Price Shifts: With the U.S. joining forces with cheaper international drug prices, pharmaceutical companies might need to revamp global pricing and marketing strategies, potentially leading to worldwide price decreases.4
To wrap it up, Trump's MFN pricing executive order ambitions to crush American prescription drug bills by mimicking the payment plans of other nations and allowing direct buying from manufacturers to skip the middleman. This bold move is already affecting the value of pharmaceutical companies' shares worldwide, generating uncertainty within the industry and possibly fostering adjustments to global pricing practices.1-4
- https://www.bbc.com/news/business-57651375
- https://www.cnbc.com/2021/07/25/donald-trumps-proposed-new-drug-pricing-model-explained.html
- https://thehill.com/policy/healthcare/572374-the-baffling-math-of-trumps-most-favored-nation-plan-and-the-difference
- https://www.reuters.com/article/us-usa-pharma-shares/pharmaceutical-shares-slide-on-trumps-executive-order-plan-idUSKCN2FL1LJ
- The MFN pricing machine, part of Trump's executive order, could lead to a significant change in the investment landscape for the pharmaceutical industry, as it allows American patients to purchase prescription drugs directly from manufacturers at the Most-Favored-Nation (MFN) price, potentially impacting the profit margins of global pharmaceutical companies.
- With the Trump Administration planning to enforce strict regulations to ensure fair pricing and combat anticompetitive practices, the health-and-wellness sector, including medical-conditions and finance, may witness a disruption as the industry shifts towards investing in strategies that align with the new MFN pricing model, and as companies reevaluate their global pricing and marketing strategies, such as those in the science and technology realm.
- The upcoming price drop in prescription drugs may have far-reaching consequences, particularly in the investing sphere, as the reduced costs may be reflected in the token economy, as blockchain technology and crypto assets become increasingly integrated into the health-and-wellness sector, making healthcare more accessible and affordable for a wider demographic.
