President Donald Trump called for legislation that would lower the prices of pharmaceutical drugs in the U.S. in his State of the Union address on Tuesday night.
"It is unacceptable that Americans pay vastly more than people in other countries for the exact same drugs, often made in the exact same place," Trump said. "This is wrong, unfair, and together we will stop it."
"I am asking Congress to pass legislation that finally takes on the problem of global freeloading and delivers fairness and price transparency for American patients," Trump added. "We should also require drug companies, insurance companies, and hospitals to disclose real prices to foster competition and bring costs way down."
Trump's remarks on drug pricing come after the administration proposed a ban on so-called backdoor deals cut by pharmaceutical companies with middlemen who get preferred status for their drugs through Medicare.
Right now, drug companies pay rebates to pharmacy benefit management (PBM) companies like CVS Health to include their medications on Medicare Part D plans. The Trump administration's proposal would leave PBMs receiving just a flat fee for including drugs on those plans. It would also pass approximately $29 billion in drug-company rebates to consumers.
Wall Street strategists said ahead of the speech that Trump's comments on drug pricing, along with infrastructure and trade, could be market moving. Strategists warned major drug stocks like Merck and Pfizer, as well as related companies like CVS Health and UnitedHealth, could come under pressure if Trump came out strong against high drug prices.
The speech comes more than a week after the longest government shutdown in U.S. history ended. On Jan. 25, both Trump and Democratic leaders in Congress agreed to re-open the government for three weeks.
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