What to expect after Trump signs order demanding lower prices from drug companies

Amna Nawaz:

Let's take a deeper dive now into President Trump's plan to lower pharmaceutical drug prices which he announced today in the Oval Office.

Stephanie Sy joins us with more — Stephanie.

Stephanie Sy:

Amna, unlike in other countries, in the U.S., pharmaceutical companies set the prices of drugs with few restraints, which means in many cases we pay a lot more compared to, say, Canadians or Europeans.

The U.S. is where these companies make most of their profits, including those that go into research and innovation for new and better drugs. President Trump wants the prices Americans pay to be on par with the lowest prices paid in other nations.

For more on what his executive order could mean, I'm joined by Stacie Dusetzina of Vanderbilt University Medical Center.

Stacie, thank you so much for joining the "News Hour."

As you know, there is bipartisan agreement that Americans pay too much for these drugs. Former President Biden made this a policy priority as well. What does today's E.O. do, and do you think it could move the needle?

Stacie Dusetzina, Vanderbilt University:

Thanks very much for having me.

Today's executive order is a bit light on details, but one of the first steps that they have articulated in the executive order is to open up price negotiations with drug manufacturers, and presumably having those negotiations take place over the next 30 days or so, with the goal of having prices in the U.S. be more similar to other countries.

They also mentioned that, if those negotiations are not successful at bringing down the prices substantially, that they will take another series of actions which, would include more formal rulemaking around things like a most favored nations proposal, which we actually saw something similar to that in the prior Trump administration.

Stephanie Sy:

Americans pay three times as much for prescription drugs than citizens of peer nations.

Stacie, listen to what President Trump said he wants to see now.

Donald Trump, President of the United States: It's called most favored nation. We are going to pay the lowest price there is in the world. We will get whoever is paying the lowest price, that's the price that we're going to get.

Stephanie Sy:

Stacie, you laid out some of what the president hopes he can do.

How realistic, though, is that kind of price decrease so suddenly?

Stacie Dusetzina:

I wouldn't expect to see changes soon, even if changes do occur.

I think there are a couple of incredibly difficult challenges associated with lowering prices to what our international peers pay. And one of the most basic challenges is that we don't really know what they pay. So we might know what the sticker price is for them, the list price of the drug, but we might not actually know what the negotiated discounted price is that they pay.

So there are a lot of details here that will slow this process down. Basically, if I were a patient, I would not necessarily expect to see any changes in the price you're paying at the pharmacy for quite some time.

Stephanie Sy:

The president, though, is hinting that he would use other federal agencies to make doing business harder for the big pharmaceutical companies if they don't cooperate. For example, he's threatening antitrust actions by the Department of Justice.

He's also saying that the government is going to be targeting not only drugs that they pay for under Medicare, but Medicaid. And the order directs the FDA to look into importing more drugs from foreign countries. What do you think of those potential actions. Could that be enough to scare these drug companies essentially into lowering prices?

Stacie Dusetzina:

It's possible that it could move the needle for some companies and some products, especially for companies that have products that maybe are ending their normal life cycle, so maybe they're facing generic competition.

So those companies might be willing to be one of the first to negotiate a favorable deal. But, by and large, many of the policy options that have been put forward under this executive order have been things that have been explored either under the current administration or prior administrations, and they're very difficult to implement.

A very good example is drug importation. A lot of those policies rely on things like importing drugs through Canada, which we have seen over and over Canada is not willing to participate in a drug importation program with the U.S. when thinking about large purchases from the U.S.

So I think that these are threats, but whether or not the drug companies think that these are going to be credible threats is something different.

Stephanie Sy:

Let's say Trump were able to pull off lowering prices to what, again, peer nation citizens are already paying. How big of an impact would that have on U.S. consumers?

Stacie Dusetzina:

It would depend a lot on which programs are affected and which drugs.

But let's say that it was a broad approach to lowering prices of drugs, it applied to all insured populations. It could have a substantial impact. Again, the logistical challenge of understanding what price is paid in other countries is one that has not been solved, even as the Center for Medicare and Medicaid Services has explored different options for implementing this type of policy.

So one question that I think is really outstanding is, how do we know what those prices are? And if we can't observe the real prices and the pharmaceutical companies just push up the list prices, the sticker price in other countries, we might be able to match that, but then that's not real savings for us.

So, again, I think that the possibility of savings is very dependent on some of these logistical issues that I don't believe have been fully worked out.

Stephanie Sy:

That is Stacie Dusetzina at Vanderbilt University Medical Center.

Stacie, thank you.

Stacie Dusetzina:

Thank you.