Trump promises ‘favoured nation’ drug price clause

President Donald Trump is preparing an executive order outlining a “favoured nations clause”, where US prices will reflect those in the country paying the least for their medicines.

Trump made the announcement in a press briefing outside the White House late last week, more than two years after promises to tackle high drug prices had been a central promise in his election campaign.

The president said that his administration is working on legislation that will see the US mirror the lowest prices charged by pharma companies in the rest of the world.

Since then Trump has attacked other countries for pushing down drug prices, implying in a policy document last year entitled American Patients First that these actions are forcing prices up in the US.

Trump told reporters: “As you know for years and years other nations have paid less for drugs than we do.

“We’re working on a favoured nations clause, where we pay whatever the lowest nation’s price is. Why should other nations – like Canada – why should other nations pay less than us?”

Just how this would work in practice is unclear – in the US there are a host of payers, mostly who service the country’s network of private insurance companies that cover the majority of people’s health programmes.

Through its Medicare and Medicaid programmes the US government only pays for health cover for older and very poor patients.

The new law builds on other efforts by the Trump administration and the Democrat-controlled House of Representatives to bring pharma prices in check in the US.

It’s a particularly vexed issue in the US as many people have to cover part or all of their prescription drug costs out of their own pocket depending on their insurance arrangements, creating problems for those on low or even middle incomes.

Separate legislation kicking in this month requires big pharma to include drug prices in TV ads and the president last month issued a separate executive order requiring hospitals and insurers to disclose negotiated rates for services.

Trump’s order also asks them to provide patients with out-of-pocket costs before their procedures.

Democrats are pushing for the federal government to negotiate prices for Medicare with drugmakers directly, something that it is unable to do under current laws.

House Speaker Nancy Pelosi’s legislation would also apply the discounts to private health plans, but is strongly opposed by Republicans who want prices negotiated in a free market.

The value of the Standard and Poor Pharmaceuticals ETF Index ticked down following the announcement, representing an across-the-board fall in big pharma share prices.

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