President Trump on Thursday sent letters to 17 of the world’s biggest drugmakers demanding that they reduce some of their U.S. prices to the much lower levels they charge other wealthy countries by late September.
Despite the strong language in the letters, which the administration posted on social media, Mr. Trump’s demands amount to a request that drug companies act voluntarily: His administration has not put forward a clear legal authority to compel them to lower their prices.
Still, he wrote, “If you refuse to step up, we will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.”
Since Mr. Trump issued an executive order in May asking drugmakers to lower their prices, many companies have submitted proposals to the administration to try to reach a truce. In the letters, the president called most of those proposals inadequate, saying they were “shifting blame and requesting policy changes that would result in billions of dollars in handouts to industry.”
Mr. Trump’s new 15 percent tariffs on imported medicines from Europe, which could go into effect as soon as sometime in August, could further complicate his efforts to lower drug prices. The tariffs would add billions in import charges for the largest drug companies, which make many of their biggest blockbusters in Europe. The levies, in turn, may lead companies to raise drug prices for American patients, government programs and employers.
In the letters, Mr. Trump insisted that U.S. drug prices must be reduced to the lowest prices they charge in a peer country — a “most favored nation” pricing model — for “every single” patient covered by Medicaid, the government insurance program for low-income and disabled Americans. (Medicaid already gets lower prices than other American payers.) He demanded the same for “all new drugs” across both government and commercial insurance, suggesting that drugs already on the market, other than for Medicaid, would be exempt.
Wall Street analysts at the investment bank Leerink wrote to investors on Thursday that “the demands outlined in the open letter are unachievable,” in part because of how hard they would hit companies’ revenues and profits.
Brand-name drug prices in the United States are three times as high, on average, as those in peer nations.
The drug industry has fiercely lobbied against policies that would tie their U.S. prices to those overseas, saying the United States should not look to other countries for how much it pays for drugs. But pharmaceutical executives share Mr. Trump’s view that European countries are paying too little for medicines.
“I personally believe that the president is right to say that price equalization should happen,” Pascal Soriot, AstraZeneca’s chief executive, said in a call with reporters this week. “The cost of R&D in our industry should be shared more fairly across rich countries.”
He added that his company had made proposals to the Trump administration “that would lead to price reductions of our products.”
In the letters, Mr. Trump also urged drugmakers to charge higher prices in other wealthy countries — but said they should not keep that added revenue for themselves and instead pass it back to Americans in the form of lower prices in the United States. (Drugmakers and Trump officials have limited leverage to drive up drug prices in Europe, where country negotiators are known for driving hard bargains and being willing to walk away if the price is too high.)
The president also called for more drugs to be sold directly to patients without using insurance, as is already being done for a few products like Wegovy and Zepbound, the popular weight-loss drugs, and Eliquis, a widely used blood thinner.
It is not clear what steps Trump officials would take if drugmakers did not meet their demands. Mr. Trump’s executive order in May had threatened to consider taking regulatory actions or importing drugs from other countries in the future. In Mr. Trump’s first term, he used a regulatory process to try to push a version of the policy for a small subset of drugs in Medicare, but a federal court blocked it, ruling the administration had skipped steps in the policymaking process.
In a few of the letters, the president added a personal flourish to the chief executives he knows well at Pfizer, Eli Lilly and Regeneron, scribbling out their last names and addressing them instead as “Albert,” “David” and “Len.”
Rebecca Robbins is a Times reporter covering the pharmaceutical industry. She has been reporting on health and medicine since 2015.
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