Pharmaceutical companies in the United States face potential significant revenue decline due to potential drug sales reductions

The Pharma Industry Braces for an Economic Shake-Up: US Drug Prices Slashed by up to 80%

Pharmaceutical companies in the United States face potential significant revenue decline due to potential drug sales reductions

America's medicine cabinet just got more affordable, thanks to President Trump. But, the pharmaceutical industry is crying foul, warning of dire consequences that could severely impact research, supply, and eventually, the health of American patients.

Medicine prices stateside are considerably higher than in many other countries. Trump aims to change this equation through a new decree. "I'm not throwing the biggest smears at the pharmaceutical companies," Trump declared as he signed the order. These companies, however, are no strangers to pressure. Trump instead took aim at European countries. American patients, he argued, are saddled with "socialist healthcare systems" like Germany, relieving some of the financial burden. However, Trump slammed the European Union, calling them "more shameless than China" in negotiations. The EU will have to dig deeper as a result: "The rest of the world will have to pay more," declared Trump, "and America will pay much less."

The decree targets a reduction in drug prices by an eye-popping 30 to 80%. US media speculates that the pharmaceutical industry might sue against the order. These industry associations firmly reject the decree. Their reasoning: The order could potentially disrupt drug supply and research funds with minimal success in controlling high costs. The president of the Pharmaceutical Research and Manufacturers of America stated in a release that "-importing foreign prices from socialist countries is bad business- for American patients."

The president of the Association of Research-Based Pharmaceutical Companies (VFA), Han Steutel, claimed that the US is the primary market for innovative medicines. "Without the revenues generated by the U.S., research and development, and consequently new therapies for European patients would be unfeasible in many cases," Steutel lamented. With an international reference to the lowest price, research costs may become unsustainable, and market launches could grow increasingly uncertain. Steutel emphasized the need for a strong, unified EU market with a coordinated drug policy.

Consulting firm Simon-Kucher predicts far-reaching consequences for the global pharmaceutical industry, including German firms. The study suggests that plummeting profit margins could imperil funds for research, production, and jobs, even at domestic locations. Conversely, with a slip in U.S. sales, companies will face pressure to secure higher prices in other developed markets, such as Germany. Indeed, pharma companies may delay or even refrain from entering the European market to shield prices in the U.S., according to Simon-Kucher.

Trump advocates the "Most Favored Nation" principle in his decree, a policy he has long sought to implement. In essence, the U.S. will no longer pay more for certain medicines than the lowest-priced nation worldwide, regardless of market size or economic clout. "This game is over," Trump declared, referring to nations that have, in his view, benefited at the expense of the U.S.

The cost of medicine has been a persistent topic in the US for years. Unlike many other developed nations, the U.S. lacks a central state price mandate. Price determinations are primarily in the hands of the pharmaceutical industry, leading to prices often significantly higher than in other countries. Germany imposes various forms of state control on its pharmaceutical market.

It's worth noting that the pharmaceutical industry wields significant influence in Washington. With strategic donations, both to Democrats and Republicans, drug companies maintain sway in legislation. Efforts to reform medicine prices and encourage competition commonly meet bipartisan resistance, citing the potential consequences for research and innovation.

References:ntv.de, jki/dpa

Enrichment Data:

• If the United States implements a decree to drastically lower drug prices, the global pharmaceutical industry may experience reduced profitability, decreased R&D funding, altered global pricing strategies, increased regulatory scrutiny, and potential challenges to market access, patient access, and innovation ecosystems.
• Concerns exist that the U.S. imposing price controls without a guarantee of improved access could paradoxically reduce patient access to innovative, life-saving medicines.
• The financial engine driving global drug innovation may slow down, affecting drug availability worldwide, not just in the U.S.
• If the pharmaceutical industry does not voluntarily lower drug prices to meet the government's targets, additional measures could be imposed, potentially including legal action against pharmaceutical companies and enforcement mechanisms such as FDA reviews, importing foreign drugs, restrictions on export, and possible license revocations.
• The U.S. pharmaceutical industry has been influential in Washington, with drug companies using targeted donations to secure influence in legislation. Bipartisan resistance to drug reform has often been cited, citing potential consequences for research and innovation.

1. In light of the US decree to lower drug prices, the global pharmaceutical industry may face reduced profitability, and the Association of Research-Based Pharmaceutical Companies (VFA) has voiced concerns about the potential impact on research and development for new therapies, especially in Europe.
2. The enactment of the US price control decree could lead to changes in global pricing strategies, with pharma companies potentially delaying or refraining from entering the European market to protect their prices in the US, as suggested by the consulting firm Simon-Kucher.
3. Discussions might arise regarding the role of science in drug development, as the pharmaceutical industry commission has been consulted on the draft directive aimed at reducing drug prices, and some industry associations have criticized the proposal, citing its potential disruption of drug supply and research funds.

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