Trump’s Executive Order on prescription drugs may spike prices, says Fidson

After months of tariff impositions and counter-impositions between the United States of America and China, both countries, yesterday, agreed to roll back tariffs on each other’s goods for an initial 90-day period, de-escalating the trade war and immediately buoying global markets.
 
Meanwhile, the Chief Executive Officer of Fidson Healthcare Plc, Dr Fidelis Ayebae, said the Executive Order on prescription drugs and pharmaceuticals signed by the U.S. President, Donald Trump, might cause an increase in the prices of drugs across the world.
  
The announcement, which was made via a joint statement, comes after a weekend of trade negotiations in Geneva, Switzerland, by officials from the world’s two largest economies, during which both sides claimed substantial progress.
  
In the statement, both sides recognised the importance of a sustainable, long-term and mutually beneficial economic and trade relationship. Global investors are heaving a sigh of relief as the tariffs affected financial markets, disrupted supply chains and stoked recession fears. Immediately after the announcement went out, the U.S. dollar gained ground against other major currencies, while the price of gold, which tends to drop when investors are feeling more secure, fell. The mutual tariff revisions will go into effect from tomorrow, May 14.
  
However, Trump’s 20 per cent fentanyl-related levies on China, imposed in February and March, will stay. Each side has agreed to lower reciprocal tariffs on the other by 115 percentage points for 90 days. That effectively means the U.S. will temporarily lower its overall tariffs on Chinese goods from 145 per cent to 30 per cent, while China will cut its levies on American imports from 125 per cent to 10 per cent, according to the statement.
 
Under the agreement, China will also suspend or cancel its non-tariff countermeasures imposed on the U.S. since April 2. As part of its retaliatory measures against the U.S., Beijing had imposed export restrictions on some rare-earth minerals; placed dozens of American firms on its unreliable entity list and export control list and launched an anti-monopoly probe into U.S. chemical giant, DuPont.

Both countries also agreed to establish a mechanism to continue discussions about economic and trade relations, led by Chinese Vice Premier, He Lifeng; U.S. Treasury Secretary, Scott Bessent and U.S. Trade Representative, Jamieson Greer.

AYEBAE noted that the Executive Order, if implemented, would also affect Research and Development (R&D) in the pharmaceutical industry, adding that it would limit R&D funding, new drug discovery and best practices.
 
Trump signed an executive order, yesterday, setting a 30-day deadline for drug-makers to lower the cost of prescription drugs in the U.S. or face new limits over what the government would pay.
 
The order aimed at reducing prescription drug prices to levels paid by other high-income countries, with cuts expected to range from 30 to 80 per cent. The U.S. President had, in a post on Truth Social on Sunday, said the executive order would implement what is known as the “most favoured nation” pricing or international reference pricing, adding that the policy was part of his administration’s broader effort to make medications more affordable for Americans.
 
“They will rise throughout the world in order to equalise and, for the first time in many years, bring fairness to America!” he said.  U.S. drug prices are among the highest globally and there is no central government price regulation for all medicines in the U.S. presently.
 
In a chat with The Guardian, Ayebae explained that in America, the drugs were sold at premium price because the documentation and standards required for those markets were not in terms of quality, but in terms of the regulatory standards, rather than in most parts of the world.
 
According to him, this implies that products that are either manufactured in North American market or that are going to those parts will be more expensive than in any other country in the world, adding that Trump intended to ensure that products entering America were as cheap as the cheapest that any manufacturer gives to any part of the world.
 
For Ayebae, if the Executive Order scales through, it will have a ripple effect around the world, and pharmaceutical companies may spread their losses in America to other parts of the world where those prices are artificially low because they are seen to be poor countries and products are given more on cost plus a little margin. 
 
“So, the prices of drugs may grow if Trump succeeds because the American market, especially the North American market, has 50 per cent of the value of the entire world pharmaceutical market. Fifty per cent is what that market represents in terms of value, but in terms of volume, it is not up to 50 per cent.
That is where the innovator companies are; they are the ones that discover new molecules, new drugs, new treatment patterns, among others. So, most R&D in the pharmaceutical industry is done in those parts of the world.”
  
He doubts the workability of the Executive Order, adding that the immediate past U.S. President, Joe Biden, wanted to do the same but was stopped by the court.