US aims to slash drug prices, India shielded
NEW DELHI: Promising to end “price-gouging and profiteering” by Big Pharma, US President Donald Trump signed a sweeping executive order Monday, aiming to drastically slash prescription drug prices and bring them down in line with those paid by other developed nations.Trump aims to potentially cut drug prices by at least 59%, or even up to 90% for certain drugs, in a move targeting innovative high-cost drugs of drug majors, particularly European manufacturers.Industry analysts believe India’s pharmaceutical sector, with exports of around $9 billion and servicing about 35% of US prescriptions with affordable generics in the most lucrative market globally, is shielded. That’s because Indian generics are already priced competitively due to sustained market pressures and cost efficiencies and align with the US goal of accessible healthcare.
The announcement first posted on his social media platform Truth Social, led to an initial decline of up to 5% in domestic pharma stocks on BSE on Monday, followed by recovery by close of trade. India’s largest drug maker Sun Pharma, which has a significant portfolio of innovative drugs, fell over 3% to close at Rs 1,686.Over the last few years, domestic majors, including Sun Pharma, Dr Reddy’s, Cipla, and Lupin, which derive significant revenue from the US, have been facing price rationalisation in the American market. Citing an example of the price differential between US and Europe, Trump said a weight loss injection is priced at $88 in London, and at $1,300 in the US. The US pays the highest prices for prescription drugs, often nearly three times more than other developed nations.The order instructs the administration to communicate price targets to pharma companies so that the US, the largest purchaser of prescription drugs in the world, gets the best deal. Further, US govt will broker new price tags for drugs, and if a deal is not reached, a new rule -“most favoured nation policy” will kick in, with the US paying the same price as the country that pays the lowest price anywhere in the world.Analysts pointed out the policy initially proposed during Trump’s first term was blocked by legal challenges and was rescinded by the Biden administration. This time around too there’s a likelihood of renewed legal battles from Big Pharma, and logistical issues such as potential drug shortages if companies restrict supply in response to price cuts, they added. On a day sensex recorded its biggest one-day gain, pharma major Sun Pharma closed 3.4% lower, Lupin closed nearly unchanged and Divi’s Labs was down 1%. BSE Healthcare index, however, closed marginally up but a major part of the gains came on the back of strong upside in hospital chains like Max Health and Apollo.
