In his endeavour to reduce the Americans’ cost of living, US President Donald Trump signed an executive order on Monday that gives pharmaceutical companies in the US a 30-day deadline to cut costs of generic medicines. Its backlash could be felt in India too – which counts the US as its biggest market – as pharma stocks tanked.
One of the “most consequential Executive Orders” in the country’s history, as per Trump, the order directed pharmaceutical companies to lower the prices of their medicines to align with what other countries pay for such prescription medicines. Trump said he would introduce a “most favoured nation” (MFN) policy whereby the US pays “the same price as the nation that pays the lowest price anywhere in the World”.
“Prescription drug and pharmaceutical prices will be reduced, almost immediately, by 30 per cent to 80 per cent. Prices will rise throughout the world in order to equalise and, for the first time in many years, bring fairness to America”, Trump said in a social media post. “For many years, the world has wondered why prescription drugs and pharmaceuticals in the United States are so much higher in price than in any other nation—sometimes being five to ten times more expensive than the same drug, manufactured in the exact same laboratory or plant, by the same company,” he added.
Experts fear the order could trigger a global price recalibration, putting pressure on low-cost Indian pharmaceutical markets since they determine prices in the lucrative US market. India’s generic drug industry is seen as problematic for international pharmaceutical companies who accuse it for using weak intellectual property rights in India to weaken competition. Trump’s executive order follows the US placing the Indian patent regime on its “Priority Watch List” for intellectual property rights (IPR), which has a significant impact on drug manufacturing.
While many believe that this order is a wake-up call for Indian pharma as companies facing tighter price controls in the West will be forced to redouble their efforts to raise prices in markets like India; others, like Indian Pharmaceutical Alliance (IPA) Secretary General, Sudarshan Jain, said that India’s generics medicine industry is unlikely to be impacted by Trump’s move to slash prices in the US by almost 59 per cent.
“The generics industry is unlikely to be impacted, as it operates on razor-thin margins. In the US, the generics industry represents 90 per cent of prescription volumes while accounting for only 13 per cent of the market value,” Jain said.
“Research and development in life sciences demands long-term commitment, substantial investment, and carries high risk. The Order emphasises that the cost of the innovation should be shared equitably among all stakeholders,” he added.
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