Core Viewpoint - The announcement by President Trump regarding a potential reduction in prescription drug prices by 30% to 80% has led to significant declines in the stock prices of pharmaceutical companies, particularly in the A-share and Hong Kong markets [1][2]. Drug Price Reduction - The U.S. has previously attempted to lower drug prices, with the Medicare program expected to save approximately $6 billion in net costs by 2026 due to new negotiated prices [3][4]. - The recent administrative order aims to link Medicare payments for certain drugs to actual hospital procurement costs, potentially lowering prices by up to 60% [5][6]. Impact on Pharmaceutical Companies - The difference between list prices and net prices can be as high as 90%, meaning companies may only retain 10% of their revenue after negotiations [4][8]. - The administrative order is expected to lead to greater price reductions than previously anticipated, impacting pharmaceutical companies' revenue [4][10]. Medicaid and Medicare Considerations - Analysts suggest that the proposed price reductions may primarily affect Medicaid, with limited impact on Medicare due to existing price buffers [2][8]. - The IRA allows Medicare to negotiate prices for certain high-cost drugs, but the complexity of the process has resulted in lower-than-expected savings [9][10]. Future Outlook - The potential for significant changes in drug pricing policies remains uncertain, with the possibility of further negotiations and adjustments to the IRA [10][11]. - The pharmaceutical industry faces challenges due to the pressure of price negotiations and the potential for reduced market access for certain drugs [11].