On Sunday, President Donald Trump announced on Truth Social that he plans to sign what he called the “most consequential executive order” in U.S. history, aimed at lowering prescription drug prices.
What Happened: Trump said the executive order, set to be signed at 9 a.m. Monday, will implement a “Most Favored Nations” policy requiring pharmaceutical companies to charge U.S. consumers no more than the lowest price they offer for the same drug in any other country.
Accusing pharmaceutical companies of overcharging American consumers, sometimes “five to ten times more” than patients in other countries, Trump slammed political opponents for enabling the status quo all these years.
Trump says that prescription drug prices will be reduced by “30% to 80%,” while rising throughout the world, to equalize and “bring fairness to America.”
Why It Matters: This move is expected to have the biggest impact on Medicare Part B drugs, which mainly constitute outpatient prescriptions and biologicals, the prices for which are directly managed by the Centers for Medicare & Medicaid Services (CMS).
| Drug Name | Manufacturer(s) | Total Spending | Primary Use |
|---|---|---|---|
| Keytruda | Merck & Co. (NYSE:MRK) | $4.0B | Cancer (various types) |
| Eylea | Regeneron Pharmaceuticals Inc. (NASDAQ:REGN) | $3.4B | Macular degeneration |
| Prolia/Xgeva | Amgen Inc. (NASDAQ:AMGN) | $2.1B | Osteoporosis, bone metastases |
| Opdivo | Bristol-Myers Squibb Co. (NYSE:BMY) | $2.0B | Cancer (various types) |
| Darzalex | Johnson & Johnson (NYSE:JNJ) | $1.9B | Multiple myeloma |
| Avastin | Roche Holdings AG (OTC:RHHBY) | $1.8B | Cancer (various types) |
These are the stocks that are most likely to be hit by this announcement when markets open on Monday, given their sizable exposure to Medicare, especially being classified as Part B.
According to a report by the Rand Corporation, a California-based policy think-tank, prescription drug prices in the U.S. are, on average, at least 2.78 times higher than other countries.
While Trump’s move is being criticized by the likes of crypto enthusiast Ed Krassenstein, calling it “just another Trump lie,” saying that an executive order can steer Medicare and Medicaid payments, but cannot force manufacturers to cut prices.
Others, such as billionaire investor Mark Cuban, have come out in support of the move, saying that it can “force transparency,” even if the President cannot force price cuts.
Drug pricing disparities have been a point of contention across the political spectrum. Recently, Novo Nordisk A/S’s (NYSE:NVO) CEO, Lars Fruergaard Jorgensen, faced Senate scrutiny on these vast differences, where he was targeted by Sen. Bernie Sanders (I-Vt.) for the high price of the company’s diabetes drug, Ozempic.
Novo Nordisk shares have an unfavorable price trend in the short, medium, and long term, but how does it compare with peers such as Johnson & Johnson, Amgen, and Roche? Sign up for Benzinga Edge to find out.
Meanwhile, Novo Nordisk, Pfizer and J&J were trading at least 3% lower in Monday premarket.
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