Bloomberg Intelligence Trump Aims to Cut US Drug Costs by Pegging to Prices Abroad
May 12, 2025
President Trump's strategy to lower drug prices by aligning them with international rates is at the forefront, raising questions about the pharmaceutical industry's future. Discussions on U.S.-China trade tariffs reveal a potential truce as both nations aim for cooperation, impacting market strategies. Analysts dive into how investors are reacting to this trade news, generating market shifts, particularly for U.S. regional banks. The ongoing challenges for businesses amid economic uncertainty, including deposit competition and supply chain issues, are also explored.
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Why U.S. Drug Prices Are High
- U.S. drug prices are higher because prices are negotiated between pharma companies and payers, unlike Europe's government single-payer system.
- This leads to earlier drug launches in the U.S. while Europe delays or refuses based on cost-effectiveness assessments.
Risks of Linking U.S. Drug Prices Abroad
- Linking U.S. drug prices to lower foreign prices risks reduced pharmaceutical R&D due to revenue cuts.
- Lack of transparency in Europe-US price comparisons complicates government enforcement and price-setting.
Role and Risks of PBMs
- Pharmacy Benefit Managers (PBMs) are middlemen causing inefficiencies and opaque pricing in U.S. drug payments.
- Government efforts aim to reduce reliance on PBMs and enable direct drug sales to consumers to lower costs.