Editor’s (re)View: Trump’s executive order on drug pricing could hurt Big Pharma’s reshoring
President Trump has used his presidential pen at an unprecedented pace early in his second term. On Monday, the tsunami of executive orders continued with Trump targeting pharmaceutical manufacturers and the cost of prescription drugs, with the goal of establishing “most-favored-nation pricing” for these products.
“Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories,” the executive order states. “As the largest purchaser of pharmaceuticals, Americans should get the best deal.”
While Trump threatened in a Monday press conference that the executive order would cut the cost of drugs by as much as 90%, the document did not provide specific price targets for medications. Instead, the order set a 30-day deadline for federal agencies to come up with a plan and communicate pricing targets to pharmaceutical companies.
It was enough to scare Swiss pharma giant Roche and put in jeopardy its planned $50 billion investment in U.S. R&D and manufacturing sites over the next five years. The drugmaker said in a statement that if Trump’s executive order were to go into effect, Roche’s “ability to fund the significant investments previously announced in the U.S. will be in question.”
Trump has threatened repeatedly to impose tariffs on pharmaceuticals to pressure drugmakers to bring manufacturing back to the U.S. It’s a threat that appeared to be working with Big Pharma companies including AbbVie, Bristol Myers Squibb, Eli Lilly, Gilead Sciences, Johnson & Johnson, Novartis, Roche, Sanofi, and Takeda — all of whom have recently pledged billions of dollars in U.S. investment.
However, if Trump follows through on his executive order on most-favored-nation pricing, Roche may reconsider its U.S. investment plans. It’s a potential reversal by a major drugmaker that could put a dent in Trump’s tariff-reshoring policy, with other pharmaceutical companies possibly following suit.
Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), warned in a statement that Trump’s most favored nation executive order would “jeopardize the hundreds of billions our member companies are planning to invest in America — threatening jobs, hurting our economy and making us more reliant on China for innovative medicines.”
John Crowley, CEO of the Biotechnology Innovation Organization (BIO), also criticized the executive order calling most favored nation a “deeply flawed proposal that would devastate our nation’s small- and mid-size biotech companies.” However, he also slammed Trump’s trade policies including tariffs.
“Patients and families are not a bargaining chip in a trade war, but that’s exactly how they are being treated — first through proposed tariffs on our nation’s medicines, now with foreign reference pricing in the name of fairness,” Crowley said.
