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President Trump said Friday that the White House was writing an executive order to require pharmaceutical companies to offer the United States government among the lowest prices in the world, in comments that were not immediately clear to many experts on the country’s health care system. “We’re working on a favored-nation clause, where we pay whatever the lowest nation’s price is,” Mr. Trump said to reporters Friday, specifying that an “executive order” was in the works. “Why should other nations like Canada — why should other nations pay much less than us? They’ve taken advantage of the system for a long time, pharma.” (Sanger-Katz, 7/5)

Trump says his administration soon would announce a “favored-nations clause,” where the amount paid by the government for a particular drug would not exceed the lowest amount paid by other nations or companies. Prices in other countries are often lower because governments directly negotiate with manufacturers. Trump mentioned his proposal when speaking with reporters before departing the White House for New Jersey, but he provided no other details. (7/5)

It was not immediately clear to what extent Trump’s announcement differs from one of the White House’s signature drug pricing proposals: an international price index that would similarly cap U.S. drug payments based on an average of prices paid in an index of developed nations. That proposal, however, is only a pilot program, meaning it would only be tested until 2025 and would only apply to a subset of physician-administered drugs. The administration is also developing that proposal through the formal process for federal regulations, not through an executive order. Last month the administration moved to formally advance that proposal by submitting it to the White House’s budget office for review. (Facher and Florko, 7/5)

Pharmaceutical stocks reacted negatively to the president’s remarks. The S&P 500 Pharmaceuticals index closed down 1.7%, and the NASDAQ Biotechnology index closed down 1.4%. Drug-makers who derive significant revenue from doctor-administered drugs, such as those for cancer and blindness, were among the hardest hit Friday. Two people familiar with White House planning said they thought Mr. Trump was referring to a proposal the White House put forward in October that would test a plan to lower costs for some drugs over five years by basing them on their costs in other countries. The proposal is under review. (Armour, 7/5)

House Democrats have proposed letting the federal government negotiate prices with drugmakers directly, like other countries. The Medicare program cannot negotiate drug prices under current law. House Speaker Nancy Pelosi’s latest draft of legislation allowing Medicare to negotiate lower drug prices would also apply those discounts to private health plans across the U.S. However, opposition is strong among Republicans who say they want prices negotiated in a free market. (Lovelace and LaVito, 7/5)

The program Trump proposed in October would apply to drugs in Part B, the segment of Medicare that covers drugs given by a physician in a hospital or clinic. The Department of Health and Human Services previously said that setting rates based on international prices would save the government $17.2 billion over five years. (Sink, 7/5)