US president Donald Trump announced late this week that he is preparing an executive order to declare US within “favored nations clause” for drug prices so that its residents pay similar rates as other nations which pay low rates for prescription drugs. Talking to reports at the White House he said that for several years people in United States have been paying more than other nations like Canada. So he and his team is working on a clause to ensure that US residents pay the same rates as that paid by lowest priced nation.
This announcement led to sharp fall in pharma industry’s stocks and S&P Pharma ETF fell by 1.4 %. Democratic Party and Trump’s administrators are working hard to bring transparency into drug pricing and lower their prices for consumers. To bring more clarity on the different pricing policy of healthcare industry he has asked Big Pharma to show their prices is television commercials from this month onwards. It also proposed new rules from January this year that it would soon remove all middlemen and force drug manufacturers to pass on rebates given to them to end customers.
President had issued an order last month asking hospitals and insurance companies to provide details of negotiated rates for all services and also give patients details of out of pocket costs before starting their procedures. The Democrat House has proposed that federal government should negotiate drug prices with manufacturers like other countries. It is not clear about how drug prices would be set and administrated by government as a similar idea announced last year was met with skepticism. Pharma companies have claimed that their price hikes have been very modest this year and expressed concern about nation’s drug rebate system. Drug makers give discounts to pharmacy benefit managers very often for favorable insurance coverage of their drugs.