In rolling out his plan to lower prescription drug prices, President Trump could have walked softly and carried a big stick. As pharmaceutical investors see it, he instead stomped loudly and wielded a wet noodle.
Trump’s social media bluster that he would peg U.S. drug prices to those in other countries was enough to initially send pharmaceutical and biotech stocks down in Europe. But then details of the executive order the president signed helped drug company stocks end the day up — by 4.4% on the American Stock Exchange’s index of biotechs and 2.4% on its index of pharmaceutical stocks.
That’s pretty surprising, because the type of policy Trump has long favored, known as “most-favored nation” pricing, would set U.S. drug prices based on what other developed nations pay. Since other nations pay a lot less than the U.S., that would be pretty catastrophic for drug companies.
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