Trump Says ‘Favored Nations’ Drug Plan to Lower U.S. Prices

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(Bloomberg) -- President Donald Trump said his administration is devising a system to allow the U.S. to buy drugs based on the lowest prices paid by other countries.

“We’re working on right now a favored-nations clause,” Trump told reporters at the White House Friday.

The Nasdaq Biotechnology Index, often used as a measure of investor sentiment about drug prices, fell as much as 1.5% on Friday. The S&P’s index of major drug and life-science stocks lost as much as 1.3%.

Last year, Trump described a proposal that would allow Medicare to set prices for drugs based on cheaper prices paid by other countries. Known as the International Pricing Index, those regulations are under review by the federal government.

“So, we’re paying a price based on the price that other nations are paying,” he said in October, referring to the index at the time as a “favored nations” arrangement. “That’s what we’re going to pay. No longer seven times more.”

The program Trump proposed in October would apply to drugs in Part B, the segment of Medicare that covers drugs given by a physician in a hospital or clinic. The Department of Health and Human Services previously said that setting rates based on international prices would save the government $17.2 billion over five years.

©2019 Bloomberg L.P.

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