Nearly £8 billion was knocked off the value of major pharmaceutical stocks on Monday after Donald Trump vowed to slash US drug prices, reviving a controversial proposal to link American medicine costs to the lowest prices paid abroad.
In a post on Sunday, the president said he would sign an executive order introducing a “most favoured nations” policy, claiming it would cut prescription drug costs by as much as 80% “almost immediately”.
Trump offered no details on how the plan would be implemented, though reports suggest it would focus on medicines bought through Medicare, the US federal health insurance scheme for older Americans.
The move reignites a long-running battle between Washington and the pharmaceutical industry, which strongly opposes any form of government price setting.
A similar initiative failed during Trump’s first term and was later struck down in court.
Shares in FTSE 100-listed drugmakers AstraZeneca PLC (LSE:AZN), GSK PLC (LSE:GSK, NYSE:GSK) and Hikma Pharmaceuticals PLC (LSE:HIK, OTC:HKMPF) fell sharply, as investors braced for renewed political pressure on US drug pricing, a key market for global pharma companies.
Down 5% in early trading, AZ was hardest hit. Analysts estimate that around 40% of its total sales emanate from the US. GSK fell 3% and Hikma was off 2%.