President Donald Trump signed an executive order on the healthcare sector yesterday, aiming to lower prescription drug prices for Americans, and reforming Medicare payment policies. The order directs the Department of Health and Human Services to collaborate with Congress on revising how it negotiates drug prices with pharmaceutical companies under Medicare. Currently, Medicare covers nearly 66 million Americans, aged 65 years and older.
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The administration began a national security investigation into the semiconductor and pharmaceutical sectors on Monday, to impose separate tariffs on them. The healthcare-related order could be a result of this probe. Trump cannot directly implement changes through an executive order because the process is outlined in legislation. However, he has instructed Health Secretary Robert F Kennedy Jr to work with Congress on changing the law.
Trump’s Healthcare Order Puts Americans First
Notably, pharmaceutical companies have been arguing for years that some medicines become eligible for price negotiations sooner than others, discouraging innovation and research. Companies are pushing to delay the timeline by four years for price negotiations on small molecule drugs (pills or capsules), which account for a majority of drugs in the market. The Biden administration’s Inflation Reduction Act (IRA) introduced different timelines for different drugs. For instance, a pill would become eligible for negotiation after it is in the market for nine years, while an injectable drug (biologics) would take 13 years.
Furthermore, the order instructs the U.S. FDA (Food and Drug Administration) to revise a drug importation program that was launched during Trump’s first term, allowing states to directly import prescription drugs from Canada. So far, only Florida has won FDA’s approval for directly importing drugs from Canada, while other states wait in queue. The administration is urging the FDA to fast-track the approval process and streamline the course for cheaper generic versions of branded medicines.
Additionally, the administration seeks to negotiate prices for a group of 15 medications, including Novo Nordisk’s (NVO) diabetes and weight management drugs, Ozempic and Wegovy, as well as Pfizer’s (PFE) cancer medicines, Ibrance and Xtandi. The order also aims to align Medicare drug payments with hospital payment rates, which could potentially reduce their costs by up to 35%. Plus, the order calls for standardizing treatment rates across hospitals and states by promoting site-neutral payments.
Which Is the Best U.S. Healthcare Stock?
We used the TipRanks Stock Comparison Tool for Best Healthcare & Medical Stocks to identify which stock is most favored by analysts. Investors can consider investing in any of these stocks after thorough research.
Currently, UnitedHealth Group (UNH), CVS Health (CVS), Eli Lilly (LLY), and Abbott Laboratories (ABT) score Wall Street’s “Strong Buy” consensus rating, with LLY stock offering the highest upside potential among them.
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