Trump To Issue 60-Day Warning Letters To Drugmakers Over Pricing

White House Press Secretary Karoline Leavitt said on Thursday that President Donald Trump is set to send out letters to 17 pharmaceutical company CEOs in the U.S., including Eli Lilly (LLY), giving them 60 days to address the global pricing disparity of drugs.

“Other nations have been free-loading on U.S. innovation for far too long, and it is time they pay their fair share,” said Leavitt, reading out one of the letters, addressed to Eli Lilly CEO David A. Ricks.

Eli Lilly’s stock dipped more than 1% in afternoon trade after the news broke. On Stocktwits, retail sentiment around the pharmaceutical giant remained in ‘bullish’ territory over the past day.

Other pharma stocks also took a hit. Moderna (MRNA) extended its downtrend, dipping nearly 7%, AstraZeneca (AZN) slipped more than 3% and Pfizer (PFE) was down over 1%. 

The warning comes after Trump signed an executive order delivering ‘most favored nation’ prescription drug pricing for U.S. patients in May.

The letter alleges that most of the proposals that the Trump administration has received to resolve the issue of drug pricing promised “more of the same, shifting blame, and requesting policy changes that would result in billions of dollars in handouts to the industry.”

It outlines that drug makers have 60 days to achieve the following goals:

- Extend the ‘most favored nation’ pricing to Medicaid

- Guarantee ‘most favored nation’ pricing for newly launched drugs

- Return increased revenues abroad to American patients and taxpayers

- Provided for direct purchasing at ‘most favored nation’ pricing

“But if you refuse to step up, we will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices,” warned the letter, adding that the Trump administration, U.S. Health Secretary Robert Kennedy Jr. and Centers for Medicare and Medicaid Services (CMS) administrator Mehmet Oz stand ready to implement these terms. 

According to the letter, the companies have till September 29 to comply. 

The VanEck Pharmaceutical ETF (PPH) dropped more than 2%, while the iShares U.S. Pharmaceutics ETF (IHE) edged 0.8% lower. 

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