Donald Trump threatens to use import restrictions on foreign drugmakers to reduce prices — Does it affect India?

Mint

5 days ago

US President Donald Trump on Tuesday threatened to use import restrictions to force foreign suppliers to reduce drug prices.
Speaking at the White House at an event with Republican lawmakers, Trump further warned pharma companies to face a 'lot of problems' if they do not agree to reduce the drug prices in the US.
Trump pledged to reduce what consumers must pay for prescription drugs.
'Drug companies will have lot of problems if they don't agree to bring prices down,' he said, making hinting at plans to use trade policy as leverage.
'We are going to get drug prices down… We will use import restrictions to force foreign suppliers to cut drug prices.'
The US President's statement comes more than a month after he signed a broad executive order in June directing drugmakers to lower the prices of their prescription drugs to align with what other countries pay.
The order said the Trump administration will give drugmakers price targets within a month and, if they fail to make "significant progress", may pursue regulatory actions or measures like importing medicines -- though analysts and legal experts say such steps would be difficult to implement.
India plays a key role in supplying pharmaceutical products to the US, including generic drugs and active pharmaceutical ingredients (APIs).
According to a report by The Times of India, New Delhi supplies around 35 per cent of all generic drugs prescribed in the US.
Therefore, Trump's order to force foreign drugmakers to cut drug prices using import restrictions could significantly affect them, coupled with the fact that India and US have not signed a trade deal as yet.
However, in June, Crisil Ratings had said Donald Trump's executive order on reducing prescription drug prices will have a limited impact on Indian pharma companies.
Citing the reason behind its observation, the credit rating firm in its report said that despite India exporting over half of its pharmaceutical output, the bulk comprises low-priced generic drugs, which already operate on razor-thin margins, leaving little room for further price cuts to materially affect revenues.
"API exports (15 per cent of India's pharma exports) are expected to be broadly unaffected, as it is not a major cost for high-margin originator drugs, abating concerns of pricing pressure," the report said.
Generic pharma drugs account for 90 per cent of the prescription sales volume but only 13 per cent of the value spending in the US. Generic drug prices in the US are very low and have lower prices in comparison to economically peer countries, it said.