President Donald Trump’s announcement that he will sign an executive order to lower prescription drug prices put pressure on pharmaceutical companies’ stock before Monday’s opening.
Trump stated in a post on his Truth Social platform on Sunday that the order, which is scheduled to be signed at 9 a.m. on Monday, will establish a “most favored nation” program in which the United States will pay the same amount for pharmaceuticals and prescription medications “as the nation that pays the lowest price anywhere in the world.”
According to Trump, his decision will “almost immediately” lower the cost of pharmaceuticals and prescription drugs by 30% to 80%. According to a 2024 analysis, Americans spend around three times as much on prescription medications as consumers in other nations.
The strategy might significantly reduce pharmaceutical corporations’ profits.
In premarket trade, shares of Johnson & Johnson (JNJ) declined 2.3%, AbbVie (ABBV) lost 3.7%, Eli Lilly (LLY) fell 2.7%, AstraZeneca (AZN) sank 3%, and Amgen (AMGN) fell 2.2%. Sanofi (SNY) saw a 2.4% decline in shares, while Bristol Myers Squibb (BMY) saw a 2% decline.
Trump hinted at impending action on drug costs, which caused several of those stocks to plummet on Friday. When questioned about Trump’s remarks late Sunday, those businesses remained silent.
The post didn’t say how the order would be implemented or if it would only apply to prescription prices covered by Medicare and Medicaid. According to Trump, the plan will save trillions of dollars for the United States.
These headlines seem concerning. Berenberg analysts Luisa Hector and Kerry Holford wrote in a note on Monday that “it is worth considering exactly how this might be implemented given the complex system of U.S. drug pricing and reimbursement and lack of full disclosure on ex-U.S. drug prices.”
“For our 11 large pharma companies under coverage, government funded drug channels represent over 40% of US pharma sales and over 20% of group sales,” according to the analysts. “In terms of sales, Bristol-Myers is most exposed to price cuts in the government channels and Sanofi least exposed, in our view.”
