President Donald Trump put the biopharma industry on its back foot earlier this month with his executive order on international reference prices. While many unknowns remained at the time of the May 12 signing ceremony, his administration is now filling in some details about the initiative—and they're sure to make pharma recoil.
In a May 20 press release, the Department of Health and Human Services (HHS) laid out expectations for how drugmakers can cooperate with the Trump order. The order applies to "all brand products across all markets that do not currently have generic or biosimilar competition," the HHS said, noting that drug companies must "commit to aligning" their U.S. prices with "the lowest price of a set of economic peer countries."
The peer countries are those in the Organisation for Economic Co-operation and Development that have a gross domestic prodcut per capita of at least 60% of the U.S.' GDP per capita, the HHS said.
"For too long, Americans have been forced to pay exorbitant prices for the same drugs that are sold overseas for far less," HHS Secretary Robert F. Kennedy Jr. said in a statement. "That ends today. We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do."
The HHS announcement comes eight days after Trump, RFK Jr. and other top U.S. healthcare officials unveiled the EO in the Roosevelt Room of the White House. Upon signing, the order directed the HHS secretary to "communicate most-favored-nation price targets to pharmaceutical manufacturers" within 30 days.
While industry analysts largely reacted that the event wasn't as bad as feared, there was some commentary that the lack of delineation between different segments of the U.S. drug market—Medicare, Medicaid and the commercial market—could raise future alarm bells.
The industry is likely to come out strongly against the HHS guidance. Immediately in the wake of the EO signing ceremony, Stephen Ubl, CEO of U.S. trade group PhRMA, said in a statement that "importing foreign prices from socialist countries would be a bad deal for American patients and workers."
"It would mean less treatments and cures and 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," Ubl added.
Soon after, Switzerland's Roche took Ubl's line of criticism one step further, warning that Trump's order threatened its ability to fund planned investment projects in the U.S. Last month, the company revealed a plan to spend $50 billion in the U.S. over the next five years.
While the order represents a threat to the industry’s pricing power, Trump tried introducing international reference pricing during his first term and that initiative fell flat in court. The biopharma industry is likely to mount intense resistance to this latest effort, and many industry watchers believe it would take a Congressional act to implement such an expansive change to U.S. drug pricing.