On July 31, US President Donald Trump sent letters to 17 of the largest pharmaceutical companies in the world. world, urging them to take further steps to lower prescription drug prices to match lower prices in certain foreign countries.

These letters represent an escalation of his administration's push to lower drug prices by launching a "most favored nation" model, which ties U.S. prescription drug prices to the lowest found among comparatively wealthy nations.

However, this runs counter to the implications of Trump's recently announced trade deal, which imposes a 15 percent tariff on most products imported from the European Union (EU), and may inevitably lead to higher prices for brand-name drugs from the European Union.

Trump is now demanding that companies immediately lower their prices that charge Medicaid patients for existing drugs, and stipulate that they charge Americans no more than the prices offered abroad for new drugs.

In addition, the White House signaled that it would use trade policy to support manufacturers in raising international prices to match U.S. prices, as long as the increased revenue abroad is directly reinvested in lowering prices for American patients and taxpayers.

Consequences of Inaction

Trump warned that if companies do not comply, the federal government will use “every tool” to address predatory pricing practices. This warning suggests possible more severe regulatory intervention.

The US president gave the companies 60 days to comply.

Criticism of Previous Proposals

In the correspondence, Trump expressed his dissatisfaction with previous industry proposals, which he considers insufficient to address the pricing problem. He insists that a more direct and effective approach is needed to ease the financial burden on Americans.

Most of the proposals promised more of the same: blame shifting and policy changes that would result in billions of dollars in aid to the industry, the letters stated.

Direct Selling Advantage

Of note is the recent move by some pharmaceutical companies, such as Eli Lilly and Novo Nordisk, toward direct-to-consumer sales, which allows for more affordable prices. This trend could influence the future approach to pricing strategy.

Selling medicines directly to patients would eliminate intermediaries and could reduce prices, provided that it is no higher than the best price in nearby countries, encouraging a more efficient and transparent supply chain.