US President Donald Trump has announced a significant reform aimed at reducing prescription drug prices in America, which he claims may necessitate higher costs in other countries, including Australia. The president signed an executive order mandating that drug manufacturers must voluntarily reduce their prices within 30 days or face restrictive measures on what the US government will pay for medications.
Trump’s directive involves the health department, led by Robert F. Kennedy Jr., to negotiate new pricing for drugs over the coming month. Should negotiations fail, the department will create a rule linking US drug prices to the lower prices available in other nations. During a press conference, Trump stated, “We’re all going to pay the same. We’re going to pay what Europe pays,” highlighting disparities in drug costs, particularly targeting European countries and Australia.
For instance, Trump pointed out that a breast cancer medication costs American consumers over $16,000, while equivalent prices in Australia and Sweden are markedly lower. He indicated that America would adopt a “most favoured nation” pricing model, ensuring that US prices align with the lowest rates available globally.
While the impacts of Trump’s executive order on the private insurance sector remain uncertain, it primarily intends to influence prices for Medicare and Medicaid patients. Trump has asserted that the goal is for other developed nations to contribute more towards drug research and development costs.
Reactions from the pharmaceutical industry have been negative, with leaders claiming that Trump’s approach could harm patient care by endangering the funding necessary for future drug research. The industry argues that adopting foreign pricing strategies could reduce the availability of treatments and undermine investments in American healthcare.
Although Trump has previously threatened to introduce tariffs on Australian pharmaceuticals, which account for around $1.6 billion in exports to the US, this recent action does not impose tariffs nor directly affect Australia’s Pharmaceutical Benefits Scheme, a topic Prime Minister Anthony Albanese has promised to protect during trade negotiations.
Trump’s narrative holds other countries responsible for inflated drug prices in the US, suggesting that pharmaceutical profits predominantly stem from the American market. He maintains that the current system is unsustainable, asserting, “The pharmaceutical companies make most of their profits from America. That’s not a good thing.”
This fresh initiative reflects ongoing attempts by the Trump administration to reform drug pricing policies, having faced legal challenges previously during his term. The efficacy and overall impact of this order on the healthcare landscape, both domestically and internationally, remain to be seen.