The US Department of Health and Human Services (HHS) has said that it is taking urgent steps in order to execute a recent executive order by President Donald Trump, which is all set to overhaul the US pricing reforms when it comes to prescription medicines across the country.
On the basis of the most favored nation pricing model, the policy by President Donald Trump needs drug makers to match the lowest prices that they can offer in comparable countries. If these companies do not adhere to this, they could as well face regulatory action.
It is well to be noted that the target price happens to be the lowest price in an OECD country with a gross domestic product (GDP) per capita of a minimum of 60% of the US GDP per capita, said the HHS. Apparently, an OECD country happens to be a member of the Organization for Economic Cooperation and Development (OECD), which is an international organization comprising 38 countries that sync with each other on democracy and market economy. The economies when it comes to the present 30 OECD member countries comprised almost 46% of the overall GDP of the world in 2021.
According to the health authority, the pharmaceutical manufacturers are anticipated to meet these specific targets, which are already identified, and satisfy the requirements of the EO.
As per Robert Kennedy Jr., the secretary of HHS, for far too long Americans have been forced to pay massive prices when it comes to the same drugs that are sold overseas for far less.
All this, according to him, ends now. They expect pharmaceutical manufacturers to fulfill their commitments in order to lower their prices for American patients, and if they don’t, authorities are going to take strict action to ensure that they do.
According to HHS, every manufacturer will be required to commit to aligning its US pricing reforms for all the brand’s product markets where there are no biosimilars or generics. Apparently, these biosimilars and generics are comparatively cheaper than branded medications, which mostly drives down the cost across the board for that drug market. When the pharmaceutical companies do not face any kind of competition from these drugs, which are duplicate in nature, the drug prices are generally high.
It is worth noting that US patients pay the highest prices when it comes to prescription drugs, which is often almost 3 times more than those in the other developed countries. As per one of the news agencies, in 2023 pharmaceutical companies launched new US drugs at prices that were 35% higher as compared to those that were launched in 2022.
Interestingly, drug price reforms happen to be a major element of the present Trump administration, with Donald Trump already saying that the country will no longer tolerate any kind of proliferation as well as price gouging from big pharma companies.
The manufacturers apparently have 30 days to meet their targets from the date the executive order was signed, which was on the 12th of May. It is worth noting that there has been an inevitable pushback when it comes to US pricing reforms. The Pharmaceutical Research and Manufacturers of America (PhRMA), which happens to be the leading trade group of the sector, has already warned that the move will have serious implications when it comes to innovations and even its access.
As per Stephen Ubl, the PhRMA CEO, in order to lower costs for Americans, they are required to address the actual reasons why the US prices are higher, which is due to the fact that the foreign countries are not paying their fair share of the taxes and middlemen are driving up the prices when it comes to US patients.
He added that the importing of foreign prices from socialist countries is going to be a bad deal for American patients as well as workers. It would go on to mean fewer treatments and cures and would also lead to jeopardizing the billions that the member companies are planning to invest in America and hence hurt the economy, threaten the jobs, and at the same time make America more reliant on China when it comes to innovative medicines.
