Congress Unlikely to Codify Executive Order on Drug Pricing: John Barkett, MBA

John Barkett, MBA, managing director in Berkeley Research Group's Healthcare Transactions and Strategy practice, discussed the reasons why Congress is unlikely to codify the recent executive order from the Trump administration that aims to reduce drug prices, including the possibility of disincentivizing innovation.

This transcript has been lightly edited for clarity; captions are auto-generated.

Transcript

Will Congress take action to codify this executive order?

I highly doubt Congress will codify this executive order. This Congress is Republican controlled, and the news from the last couple of weeks has suggested that Congress is not interested in "most favored nation" pricing for pharmaceuticals. This feels like something that is a Trump-specific issue. He kind of views these different prices paid by the rest of the world from us, the same way he views tariffs, as he feels like the rest of the world is taking advantage of the US.

I think there is some truth to that argument. We are paying more to try to finance innovation. That argument that if we pay too little, there won't be enough incentive or capital for drug manufacturers to develop the next generation of treatments and cures is something that enough policymakers in the US take seriously that we've been willing to not change our laws to pay lower prices, and other countries can free ride off that. But that also means that if we pursue policies to lower our prices here without raising prices elsewhere, then potentially we're going to really dampen the incentives for innovation.

To the credit of the administration, these executive orders, and this one that came out Monday, they do say we're going to have the Commerce Department and the US Trade Representative, they're going to be pushing for higher prices in the rest of the world so that we can push for lower prices here and not affect innovation. But there too, there are execution risks, legal risks. [Maybe] not legal risks, but just what legal standing does the president of the United States have to have Romanians pay higher prices for drugs in Romania, or to have Brazilians pay higher prices for drugs in Brazil?

Maybe you could argue it's all part of the tariff debates, tariff negotiations that are happening. But even then, it's just not an easy thing for the trade representatives of other countries to commit to. Other countries' laws determine how they buy drugs, not the negotiating abilities of their trade representatives. Even if they were sympathetic to the idea, their hands may be tied in making it happen. And raising the price of drugs in those countries would likely be as politically unpopular as high drug prices are here.