Trump drug price executive order includes MFN pricing

WASHINGTON— The Trump administration on Monday unveiled a sweeping plan that aims to lower prescription drug prices — but its impact on the pharmaceutical industry remains to be seen.

The plan relies on drugmakers striking deals with the U.S. government to lower their prices, with a threat of new government regulation and legal investigations if they don’t. It calls for basing U.S. drug prices on those paid by other countries, aiming to slash prices in the U.S. and push them up overseas through trade policy.

However, investors responded positively to the news, as the NYSE ARCA Biotechnology Index rose almost 3% and the ARCA Pharmaceutical Index rose 1.5% in morning trading. One reason may be that many of the ways the plan seeks to impose consequences on pharmaceutical firms, such as importing medicines from other countries, have proved cumbersome to execute in the past or have run into legal challenges.