Members of Congress are being informed by the pharmaceutical industry’s top trade association that President Donald Trump’s new plan for medication prices could cost drug firms up to $1 trillion over ten years. The White House originally proposed the proposal last week as a means of funding the president’s tax reduction plan, but it caught the pharmaceutical sector off guard and sparked a heated lobbying effort.
According to over a dozen industry lobbyists and consultants who were not permitted to publicly discuss their activities, it has pulled the sector off the sidelines, with many top executives getting ready to barnstorm Capitol Hill this week.
In order to reduce the costs that foreign nations pay for medications, the White House specifically pushed House Republicans to peg pricing for medications in the Medicaid program. This move would cost pharmaceutical companies billions of dollars in lost income. Although Trump has previously considered variants of the concept, it was unexpected that it may be applied to the program for low-income and handicapped individuals.
According to several lobbyists, the brand-drug organization PhRMA called its board members urgently on Sunday to discuss its resistance plan. As industry leaders from some of the biggest pharmaceutical firms in the world gather in Washington for a previously planned in-person board meeting this week, the pressure will only increase.
Trump’s second term has seen pharmaceutical executives mostly tread carefully as he publicly considered imposing tariffs on the industry, appointed Robert F. Kennedy Jr., a vaccine skeptic, to head the Department of Health and Human Services, and gave Elon Musk, the richest man in the world, the authority to fire employees from organizations that oversee pharmaceutical companies. The “international reference pricing” approach will put the industry’s power to sway Republicans in the White House and on Capitol Hill to the test.
“Any form of government price setting harms American patients.” According to a written statement from PhRMA spokesperson Alex Schriver, imposing foreign reference pricing under Medicaid does not save patients money and may even increase their costs. The majority of Medicaid’s patient prescription expenses are small, fixed-dollar sums.
According to these lobbyists and consultants, pharmaceutical company CEOs are calling Capitol Hill and asking for face-to-face meetings. Over the course of a day and a half, seven pharmaceutical companies, consultants, and industry groups contacted them, according to a Republican congressional staffer who was not permitted to discuss the matter publicly.
There are repercussions since Medicaid medicine prices are linked to another hospital drug discount program. The worldwide medication price strategy, according to a spokesman for the biotechnology group BIO, will especially hurt creative small- and mid-sized biotech businesses.
In 2023, pharmaceutical firms sold over $60 billion worth of medications under the hospital discount program, a more than 20% increase over the previous year. Brett Guthrie, the leader of the group responsible for identifying Medicaid reduction, is among the House Republicans who have previously rejected international reference pricing. A source close to the chairman’s thoughts stated on Tuesday that Guthrie’s worries about the policy have not altered.
To reach final judgments on the Medicaid modifications and other recommendations, Guthrie will meet with fellow Republicans on his committee early on Wednesday, according to a committee member. There isn’t a formal bill that would provide us a way to calculate the precise amount of money the federal government might save from such a program. These savings, which are probably far less than the $1 trillion total industry damage estimated by PhRMA, are significant to Republican senators who are frantically trying to figure out how to pay for tax cuts.
Trump’s insistence on lowering drug prices and on-shoring drug manufacturing should not be surprising given his actions during his first term and during the campaign, according to Joe Grogan, a former White House domestic policy council chief during Trump’s first term who currently consults for health care companies. Some people in the industry believe he wasn’t serious, which baffles me. Grogan stated, “He couldn’t have been clearer.”
