Trump’s ‘Most Favored Nation’ Drug Plan Likely To Face Pushback, JP Morgan Analysts Say

JPMorgan analysts said Trump’s "most favored nation" drug pricing order is unlikely to move forward without Congressional support and will likely face legal and industry resistance, limiting its near-term impact on pharma stocks.

President Donald Trump’s executive order for "most favored nation" pharmaceutical pricing in the U.S. will encounter significant implementation difficulties and will probably have minimal impact on major European pharmaceutical companies, according to JPMorgan analysts Richard Vosser and James Gordon.

This executive order intends to match U.S. drug prices with those of other developed countries in order to lower domestic healthcare costs. 

The JPMorgan analysts said that executive action alone will not suffice to enact the policy, which needs Congressional backing to advance, according to The Fly.

The analysts noted that the structural changes proposed will likely encounter legal challenges in the court system and strong opposition from numerous stakeholders.

“The path to implementation of this Executive Order is challenging and likely to face significant push back,” Vosser and Gordon said.

The analysts pointed out that they should expect resistance from both Congress and major players in the healthcare industry including pharmaceutical companies and pharmacy benefit manager (PBM) organizations.

JPMorgan said the measure will have a limited impact on pharmaceutical companies including AstraZeneca, GSK, Novartis, Roche, Sanofi, and Novo Nordisk during the near term as legal and legislative obstacles may emerge.

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, is down 0.3% year-to-date, while the Invesco QQQ Trust (QQQ), which tracks the Nasdaq-100, has declined 0.5%. 

In contrast, the SPDR Dow Jones Industrial Average ETF Trust (DIA) is up 0.1% for the year.

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