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(Bloomberg) — The US Department of Health and Human Services is demanding that pharmaceutical companies cut drug prices to the lowest price offered to nations with economies that are similar to the US’s, the agency announced Tuesday.
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Earlier this month, President Donald Trump threatened drugmakers with regulatory action if they do not lower their prices to be more in line with what other developed countries pay. As part of that announcement, the White House directed HHS to release details on what prices the administration is hoping to achieve.
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HHS said it is asking drugmakers to price drugs that don’t already have generic competition at the lowest level offered to any member of a group of countries in the Organization for Economic Cooperation and Development that have a gross domestic product per capita of at least 60% of US levels.
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“We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do,” HHS Secretary Robert F. Kennedy Jr. said in a written statement.
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The criteria for which countries are selected are the same as the parameters used in a 2020 regulation proposed by the first Trump administration that would have set Medicare payment rates for some drugs based on international pricing data. The countries included in that demonstration were Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Israel, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland and the UK.The regulation was never implemented.
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However, the list for the new Trump proposal could be different, as economic data may have changed. HHS did not respond to an inquiry about which countries it considers to be included in those categories.
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An HHS analysis of 2022 data published last year found that US prices for brand-name drugs are 445% of those offered to France. The analysis did not take into account any confidential discounts that drugmakers offered US purchasers.
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“Our take is that the Administration’s demand is extreme, and we do not think that the industry can deliver what is stated,” Leerink Partners analyst David Risinger said in a note. “In our view, biopharma industry executives need to further educate the Trump administration about highly problematic aspects of this pricing expectation.”
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PhRMA, the brand drug industry’s largest lobbying organization, and the biotechnology lobbying group the Biotechnology Innovation Organization did not respond to requests for comment.
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—With assistance from Madison Muller.
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English (US)