Wrong Medicine

Trump's quest for third-world drug prices for US consumers will slow down drug discovery pace

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President Donald Trump's latest executive order seeks to slash prices of prescription drugs by 30-80%. The idea behind the move is to let US consumers "pay the same price (for medicines) as the nation that pays the lowest price anywhere in the world". The order provides a 30-day window for implementation, but lacks concrete details about how the cost of the price cuts will be shared among the stakeholders.

In any case, Trump's move amounts to a radical policy shift. If implemented in letter and spirit, the order could have serious adverse implications for Big Pharma and half a dozen monopolistic drug distributors — pharmacy benefit managers — in the US market, which corner big margins in proprietary drugs business. The new policy might also negatively impact innovation-driven pharma companies in Europe, Asia, and elsewhere, and to a lesser extent, exporters of generic drugs to the US.