Trump’s medicine pricing order puts pharma on notice: Will Australia be forced to pay more?

In a move with global implications, U.S. President Donald Trump has signed a controversial executive order to slash drug prices, and the ripple effect could force the newly-reinstated Albanese Government to increase the cost of medicines.

The Most Favoured Nation executive order, which was blocked by the courts in Trump’s first term, directs pharmaceutical companies to lower U.S. drug prices to match those in other developed countries, with mandated cuts between 59% and 90% within 30 days. If companies fail to make “significant progress” within six months, Trump has vowed to escalate action.

“Everybody should equalise. Everybody should pay the same price,” Trump declared, challenging decades of pharmaceutical pricing practices.

Jared Mondschein, Director of Research at the US Studies Centre at the University of Sydney, warned that this move would impact all developing countries as pharmaceutical companies look to “balance out” their lost profits from the drop in US medicine costs.

Trump claims the executive order was partly spurred by a friend’s anecdote about a weight loss injection that cost just $88 in London compared to a staggering $1,300 in the U.S.

The pharmaceutical lobby is already pushing back. The Pharmaceutical Research and Manufacturers of America (PhRMA) labelled the order as reckless.

“Importing foreign prices from socialist countries would be a bad deal for American patients and workers. It would mean less treatments and cures and would jeopardise the hundreds of billions our member companies are planning to invest in America – threatening jobs, hurting our economy and making us more reliant on China for innovative medicines,” stated PhRMA President and CEO, Stephen Ubl.

He further added, “The Administration is right to use trade negotiations to force foreign governments to pay their fair share for medicines. U.S. patients should not foot the bill for global innovation. The U.S. is the only country in the world that lets PBMs, insurers and hospitals take 50% of every dollar spent on medicines. The amount going to middlemen often exceeds the price in Europe. Giving this money directly to patients will lower their medicine costs and significantly reduce the gap with European prices.”

Mondschein said the move reflects long-standing grievances in Washington.

“There is clearly a dynamic that the US feels that the US’ allies and partners are not paying their fair share. It’s a tough predicament,” he said. “I think anyone that says they’re surprised by Trump doing this was not paying attention.”

Taking a direct shot at pharmaceutical lobbying, Trump claimed that campaign donations “can do wonders, but not with me, and not with the Republican Party. We are going to do the right thing.”

The Trump administration is also considering tariffs on pharmaceutical imports – which had been previously exempted – a move that could trigger drug shortages and global supply disruptions.

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