‘Game-changer’: New Trump executive order to hit Aussies
A new executive order by Donald Trump could have the most significant impact on Australians of any of the moves made by the US President since he came back into office.
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US President Donald President Trump has signed an executive order that could affect Australians harder than any of his previous directives since taking office in January.
The order – described as a “game-changer – is meant to slash Americans’ pharmaceutical costs by up to 90 per cent by tying the price paid by government programs like Medicare to the rates drug companies charge overseas customers.
But the fallout for the rest of the delevoped world will be significant, including Australia where the government could be forced to put up the cost of medications to Australians.
“What’s been happening is, we’ve been subsidising other countries throughout the world,” Mr Trump said at a White House signing ceremony, calling the action one of his “most important orders”.
“Some prescription drug and pharmaceutical prices will be reduced almost immediately by 50 to 80 to 90 per cent, he added. “Big Pharma will either abide by this principle voluntarily or we’ll use the power of the federal government to ensure that we are paying the same price.”
Mr Trump announced he would be signing an executive order to reduce the costs of medications by 30 to 80 per cent, in a move that has sent ASX-listed pharmaceutical companies crashing.
The federal government spent $17.7 billion on subsidising medicines in the 2023-2024 financial year.
Without a concession card, the maximum cost of a prescription in Australia for a drug under the Pharmaceutical Benefits Scheme is $31.60 but with a card, the maximum cost is just $7.70.
As part of a budget measure, the Australian government released a PBS cap for pensioners and concession card holders, meaning that the $7.70 price would be frozen until 2029.
The policy is a revival of Mr Trump’s signature “most favoured nation” drive from his first term, with a new push to get foreign countries to take on more of the research and development (R&D) costs that experts say America has disproportionately shouldered.
“Our Country will finally be treated fairly, and our citizens Healthcare Costs will be reduced by numbers never even thought of before,” the president previously promised on Truth Social Sunday. “The United States will save TRILLIONS OF DOLLARS.”
The order directs US Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick to “take all appropriate action against unreasonable and discriminatory policies in foreign countries that suppress drug prices abroad,” White House officials said.
After 30 days, Health and Human Services Secretary Robert F. Kennedy Jr. will “set clear targets for price reductions across all markets” in the US and open a “round of negotiations” with industry.
Some experts have argued that foreign countries “freeload” off the US by artificially suppressing drug prices in their countries, leading pharmaceutical companies to jack up costs for Americans to pay for R&D.
“The United States has less than 5 per cent of the world’s population, but accounts for roughly three-quarters of global pharmaceutical profits. The president has made clear that this status quo is unacceptable,” a White House official told reporters ahead of the order signing.
“Basically, what we’re doing is equalising” drug prices between the US and other countries, Mr Trump claimed, adding that “American patients were effectively subsidising socialist health care systems in Germany, in all parts of the European Union.”
In contrast to Trump’s first administration, which pursued “most favoured nation” status to boost the negotiating position of Medicare Part B, the order signed Monday will be much broader in scope, according to White House officials.
“We don’t anticipate a negative impact on innovation,” a White House official told The New York Post, responding to the most common critical complaint. “The United States alone should not be paying for all of the innovation in the entire world in this market.”
The Justice Department and Federal Trade Commission will also be tasked with enforcing anti-competitive practices against companies to push their prices down.
Additionally, the Food and Drug Administration will try to import drugs from other countries in a bid to bring consumer costs down. Under current law, the FDA can import certain drugs from Canada to bring costs down, as long as health and safety are not put at risk. Mr Trump wants that carveout expanded to other nations.
“Special interests may not like this very much, but the American people will,” Mr Trump said of the executive order. “I am doing this for the American people. I’m doing this against the most powerful lobby in the world, probably — the drug lobby.”
White House officials rejected characterisations of the policy as a version of price control.
“In the global market, you have a situation where Americans are paying several times the price for the same exact drug, even the same manufacturing facility and whatnot, that our peers and other countries are paying,” an official told reporters.
“This isn’t price fixing per se. But what we’re doing here is kind of initialising market forces to operate the way they’re supposed to.”
Mr Kennedy lauded Mr Trump’s executive order, saying he “never thought that this would happen in my lifetime” and said the policy was the “fulcrum of Bernie Sanders’ runs for presidency [in 2016 and 2020].”
Former US President Joe Biden had nixed Mr Trump’s “most favoured nation” policy from his first term. Mr Trump chided that his predecessor did so “without any knowledge of what he was doing” and ripped the new drug pricing system that Mr Biden pursued under the Inflation Reduction Act.
Mr Trump also pledged that his administration will take aim at the “middlemen” in drug prices, alluding to pharmacy benefit managers, which had drawn bipartisan criticism.
“We’re going to totally cut out the famous middlemen,” Mr Trump said.
“I’ve been hearing the term for 25 years. I don’t know who they are, but they’re rich, that I can tell you.”
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Originally published as ‘Game-changer’: New Trump executive order to hit Aussies
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