The US President Donald Trump has called on major pharmaceutical companies to lower US drug prices within the next 60 days in a move that has rattled healthcare stocks and sparked debate about whether such a demand is realistic or even enforceable.
Last week, former President Donald Trump announced on Truth Social that he issued stern letters to the CEOs of 17 major pharmaceutical companies, demanding that their US drug prices be lowered to match the lowest rates offered in other developed countries within 60 days. The move builds on an earlier Executive Order issued on 12 May, which established a Most‑Favored‑Nation drug pricing policy aimed at drastically reducing US prices by as much as 30% to 80%.
Trump’s letters to companies, including Pfizer, Merck, Eli Lilly, Johnson & Johnson, Amgen, AstraZeneca, and others, call for binding commitments by 29 September. The administration warned that, if companies do not comply voluntarily, they could invoke regulatory rule-making or other measures, including direct-to-consumer sales at Most‑Favored‑Nation rates or eliminating intermediaries, to enforce lower prices.
Impact on the stock market
According to Jeff Jonas, portfolio manager and analyst at Gabelli Funds, the letters sent to drugmakers have already weighed stock prices. “It clearly weighed further on the stocks since the letters came out, but I see this as more jawboning rather than a real, enforceable threat,” Jonas said. “This issue should have been raised as part of the trade negotiations with the European Union (EU), at the presidential or cabinet level. It’s not something any one company can negotiate and fix, and certainly not in 60 days.”
Trump’s directive comes amid continued public frustration over the cost of prescription medicines in the US, which remains the highest in the developed world. But Jonas pointed out that structural and geopolitical realities make the 60-day timeline unrealistic. Most European countries, he noted, cannot take on additional drug spending as their budgets are already heavily committed to defense. And unlike in the US, the pharmaceutical industry’s main lobbying group, PhRMA, wields less influence in Europe, making coordinated action even harder.
Can Trump legally force Pharma companies to lower prices?
The question of enforcement also looms large. “It’s unclear what actions Trump can take,” Jonas said. In his first term, Trump floated a Medicare demonstration project aimed at linking US drug prices to those in other countries, but the initiative never materialized. “That would be 2027 at the earliest, and I don’t think he wants to wait that long,” Jonas added.
Options for immediate leverage appear limited. Attempting to block companies from participating in government programs like Medicare and Medicaid could be politically disastrous, Jonas argued, and logistically impractical. Likewise, applying price controls to private insurance markets would face serious legal and logistical hurdles.
Both parties have, at times, supported the idea of importing lower-cost drugs from abroad, but legislative and regulatory barriers have kept such efforts from moving forward. “The industry can largely block that,” Jonas noted. Nor would pharmaceutical tariffs align with Trump’s goal, as these would push prices higher, not lower.
Given these constraints, Jonas believes that Trump’s 60-day ultimatum is unlikely to result in meaningful price reductions, at least in the short term. “The 60 days ultimately comes and goes, and there’s a good chance this ends up in litigation if Trump tries to put penalties on the industry,” he said.
Increased market volatility is likely to remain
Legal risks loom as the deadline approaches: “There’s a good chance this ends up in litigation if Trump tries to put penalties on the industry,” Jonas warns. Meanwhile, markets remain unsettled: European pharma stocks, including Sanofi, GSK, AstraZeneca, Merck KGaA, and Novo Nordisk, dropped between 1% and 4% on 31 July as investors reacted to Trump’s intensified campaign.
For investors, the episode underscores ongoing volatility in the healthcare sector. “It looks like pharma and healthcare will continue to be challenged and volatile for the next few months,” Jonas said. While the political spotlight on drug prices is not new, Trump’s latest move adds another layer of uncertainty for an industry already navigating regulatory, pricing, and market pressures.
Whether the former president’s push leads to tangible policy changes or simply fades into the political noise remains to be seen, but for now, Wall Street appears to be bracing for more turbulence.y for an industry already navigating regulatory, pricing, and market pressures.
Whether the former president’s push leads to tangible policy changes or simply fades into the political noise remains to be seen, but for now, Wall Street appears to be bracing for more turbulence.
