U.S. President Donald Trump signed an executive order aimed at lowering drug prices in the United States to levels found overseas, while U.S. pharmaceutical stocks showed an upward trend during trading on the 12th (local time).
Eli Lilly shares were traded at $759.84 on the New York Stock Exchange on that day at 12:50 p.m. The stock price rose by 3.44% ($25.27) compared to the previous trading day. Although it dropped to $722.18 early in the session, the stock successfully rebounded. At the same time, Merck & Co. showed a stock price increase of over 5%. Pfizer and Johnson & Johnson also exhibit an upward trend.
President Trump, while signing the executive order on drug price reduction, noted, "The U.S. will no longer subsidize foreign healthcare," adding, "I will not tolerate the excessive profits and price increases by large pharmaceutical companies any longer."
In a situation where U.S. pharmaceutical companies spend astronomical research and development (R&D) expenses to develop new drugs, it is reported that they are ultimately burdening other countries with the costs that should be paid as they are selling drugs at high prices only in the U.S.
President Trump stated that pharmaceutical companies would be supported in negotiating prices with foreign countries, and if other countries do not cooperate, tariffs could be used as leverage. He added that he aims to align prices with the so-called "most-favored-nation (MFN) price," which is the lowest price paid by other developed countries.
President Trump claimed through his social media platform, Truth Social, that this executive action could result in a 59% reduction in drug prices. He also stated at a press conference, "Drug prices could fall between 59% and 80%, and may even drop by 90%."
The U.S. think tank, Rand Corporation, evaluated that prescription drug prices in the U.S. are on average 2 to 3 times higher than those in other developed countries, with some countries seeing prices up to 10 times higher. If the executive order results in a price reduction as claimed by President Trump, it could benefit patients in the U.S.
The issue is that it could actually become a burden for U.S. pharmaceutical companies. There is a high possibility that the companies may withdraw from lower-margin overseas markets rather than lower the high prices in the profitable U.S. market. The Pharmaceutical Research and Manufacturers of America (PhRMA) estimated that pharmaceutical companies could incur losses of up to $1 trillion (about 1,400 trillion won) over the next 10 years.
Earlier, after President Trump announced plans to impose tariffs on imported pharmaceuticals, companies like Eli Lilly and Pfizer also voiced opposition.