Raphael Stevens

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    in Finance

    Fed governors Bowman, Waller explain their dissents, say waiting to cut rates threatens economy

    Two Federal Reserve officials who voted this week against holding a key interest rate in place explained their decisions Friday, both indicating that the central bank is making a mistake by waiting to ease policy amid rising threats to the labor market.
    Governors Christopher Waller and Michelle Bowman both said they wanted a quarter percentage point reduction, as they see tariffs having only a temporary impact on inflation. They said staying on hold, as the rate-setting Federal Open Market Committee has done since December, poses risks to the economy.

    In separate statements, Waller and Bowman laid out their reasons for dissenting, the first time two governors have done since 1993. The committee voted 9-2 to hold, and the differences of opinion reflect “a healthy and robust discussion,” Waller said.
    “There is nothing wrong about having different views about how to interpret incoming data and using different economic arguments to predict how tariffs will impact the economy,” he wrote. “But, I believe that the wait and see approach is overly cautious, and, in my opinion, does not properly balance the risks to the outlook and could lead to policy falling behind the curve.”
    Further, Waller insisted that inflation impacts from President Donald Trump’s tariffs have been “small so far” and could continue in that vein.
    Both he and Bowman did not advocate for the kind of dramatic cuts Trump has pushed. The president has suggested the federal funds rate, which sets a target that banks use for overnight lending but spills over into many other rates, should be as much as 3 percentage points lower.
    Waller suggested something more gradual — cutting by as much as 1.5 percentage points, at a slow pace as the committee monitors impacts from policy easing.

    Similarly, Bowman backed “gradual cuts” as she also said tariffs are having only limited impact on prices. In fact, she said that without the duties, the Fed’s key inflation measure would be below 2.5% “and considerably closer to our 2 percent target.”
    “With tariff-related price increases likely representing a one-time effect, it is appropriate to look through temporarily elevated inflation readings,” said Bowman, who also serves as the Fed’s vice chair for bank supervision. “I see the risk that a delay in taking action could result in a deterioration in the labor market and a further slowing in economic growth.”
    Trump has been unrelenting in his criticism of the Fed for not cutting. In a Truth Social post Friday morning, he again tore into the central bank, and Chair Jerome Powell in particular.
    “Jerome ‘Too Late’ Powell, a stubborn MORON, must substantially lower interest rates, NOW. IF HE CONTINUES TO REFUSE, THE BOARD SHOULD ASSUME CONTROL, AND DO WHAT EVERYONE KNOWS HAS TO BE DONE!” Trump said. More

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    Startup Trunk Tools is using AI to reduce construction errors and waste

    That lack of innovation in commercial technology contributes to outdated documentation and errors in tasks that then have to be redone as well as administrative drag.
    All told, it contributes to nearly $1 trillion in lost productivity each year, according to an August 2024 report from McKinsey Global Institute.
    Sarah Buchner launched Trunk Tools, a generative AI platform trained on real construction workflows. It automates some of the more tedious tasks and also pinpoints project risks and simplifies documents.

    A worker inside a residential building under construction in the Las Palmas neighborhood of Medellin, Colombia, on Wednesday, July 16, 2025.
    Esteban Vanegas | Bloomberg | Getty Images

    A version of this article first appeared in the CNBC Property Play newsletter with Diana Olick. Property Play covers new and evolving opportunities for the real estate investor, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large public companies. Sign up to receive future editions, straight to your inbox.
    Homebuilding has long been one of the slowest industries to modernize, and commercial construction isn’t far behind. Its scale is enormous, and yet it remains one of the least digitized industries in the world. 

    That lack of innovation in commercial technology contributes to outdated documentation and errors in tasks that then have to be redone as well as administrative drag. It’s a huge drain on time, budgets and materials and can lead to costly delays and unnecessary environmental waste.
    All told, it contributes to nearly $1 trillion in lost productivity each year, according to an August 2024 report from McKinsey Global Institute. Historically, construction companies spent an average of less than 1% of revenues on IT, less than a third of what is common in automotive and aerospace, according to the report.
    Sarah Buchner learned all this the hard way. The daughter of a carpenter in Austria, she came to the U.S. to learn construction and worked her way up to foreman, superintendent and eventually contractor. 

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    “At the peak, I was running a $400 million high-rise, 600 guys working for me in the job. And on that specific construction side, I had a fatality, which in construction happens, unfortunately, a lot,” she said. “But I was, I think, very young, and couldn’t fully process what was happening.” 
    So Buchner decided to build a health and safety app, switching careers from construction to construction software and construction tech. A decade later, with the proliferation of AI, she launched Trunk Tools, a generative AI platform trained on real construction workflows. It automates some of the more tedious tasks and also pinpoints project risks and simplifies documents.

    “We take all of the unstructured documentation on a construction site, and we use different AI and machine learning tools to restructure it,” Buchner explained, noting that an average high-rise project in New York City, costing about half a billion dollars, would require about 3.5 million pages of documentation. 
    “Those pages change every single day, because the planning isn’t finished by the time you start construction,” said Buchner.
    So contractors often get conflicting orders and can’t search the documents to clarify. For example, take the installation of an emergency exit door. One data set says it needs electricity, but the electrical drawings don’t have an outlet there. Discrepancies in the data, Buchner says, not only waste money but contribute to carbon emissions due to work inefficiencies.
    Trunk Tools’ technology can process millions of unstructured documents, from blueprints to drawings to schedules and specs, and then return them in a clearer format that workers can better follow. The startup is partnering with Microsoft to integrate the technology into the company’s suite of options.
    Trunk Tools just announced a $40 million Series B funding round led by global software investor Insight Partners with participation from Redpoint Ventures, Innovation Endeavors, StepStone, Liberty Mutual Strategic Ventures and Prudence. This investment brings its total funding to $70 million. More

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    How much are Southwest’s new assigned seats? It depends

    Southwest put its first-ever assigned seats on sale this week, ending more than half a century of open seating.
    Prices vary depending on where you sit on the plane and demand.
    Major airlines took in more than $12 billion in seating fees between 2018 and 2023, according to a Senate report last year.

    Southwest Airlines new premium seats featuring extra legroom.
    Leslie Josephs/CNBC

    Southwest Airlines’ first assigned seats went on sale this week for flights starting Jan. 27 of next year. What you’ll pay will vary.
    The price depends on the route, when you’re traveling and where you sit. Selecting your ideal seats can add hundreds of dollars to the cost of a family vacation, similar to flying on other airlines.

    For example, a roundtrip ticket in the “Choice” ticket class — the second cheapest type of ticket — between Denver International Airport and Orlando International Airport leaving Feb. 14 and returning Feb. 21, which coincides with Presidents Day, was going for $692 on Southwest’s website on Thursday. For seats the airline deems “preferred,” it would be $46 for a window or aisle seat in Rows 7 to 13, or $41 for a middle seat in those rows.
    Customers with elite frequent-flyer status on the airline or with Southwest Airlines credit cards will be exempt from some of the fees.
    An extra-legroom seat, located in the first six rows of the Boeing 737 Max 8 aircraft, was going for $96 for window or aisle. Prices were similar, but slightly lower, for the return flight.

    Arrows pointing outwards

    A Southwest Airlines seating chart for a Boeing 737 Max 8.

    Seat selection in the back of the plane in rows 17 through 30 are free of charge for a “Choice” ticket. The more expensive “Choice Preferred” ticket includes preferred row seats, while the priciest option, “Choice Extra” includes extra-legroom seats and also comes with a free “premium” beverage like an alcoholic drink.
    The same route, on the same days on United Airlines was $665, with extra-legroom seats varying from $105 to $126 each way and $37 to $42 for preferred seats.

    The changes are all part of Southwest’s plan to ditch the hallmarks of its more than half-century-old business model. For decades, that included open seating (and uniform legroom throughout the cabin) along with a quirky boarding system that led to a mad dash at the airport for a seat, and two free checked bags for all customers.
    Southwest’s rivals have made billions on bag and seat fees, raising questions for years from investors and Wall Street analysts about whether the carrier was maximizing revenue. Last year, activist hedge fund Elliott Investment Management took a big stake in Southwest, calling for such changes, and leading to a board shakeup. Major U.S. carriers brought in $12.4 billion assigned-seating fees between 2018 and 2023, according to Senate panel report.
    Southwest’s first-ever bag fees started with tickets sold in late May. The airline is charging $35 for a first checked bag and $45 for a second, roughly in line with other airlines.

    Read more CNBC airline news

    The carrier also joined rivals in launching a no-frills basic economy ticket, where customers don’t get free, advanced seat selection, something Southwest expects it will benefit from next year, when seat assignments go into effect.
    “We assume there will be a positive impact in Q1 when we go to assigned seat, that’s a more compelling buy-up from basic economy to Choice,” Andrew Watterson, Southwest’s chief operating officer, said on an earnings call last week. “However, should we succeed in making it a positive before then, that’s an additional tailwind as we go throughout the second half.”
    Southwest will reward its most loyal customers though, with choice seats as perks.
    Frequent flyers with top-tier A-List Preferred status on Southwest will get extra-legroom seats at booking, as well as two free checked bags, and A-List status-holders can book them 48 hours before departure, though there is no guarantee they’ll be available. Both groups will have complimentary access to preferred seats. Several Southwest credit cards also provide access to preferred seats, regardless of the fare type. More

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    Family offices turn to more structured pay to keep executives for the long term

    Private investment firms of the ultra wealthy are creating new incentive plans for top executives that are boosting pay, according to a new report.
    While family offices have often given special performance bonuses to executives, the awards are becoming more structured and clear.

    Maskot | Maskot | Getty Images

    A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high-net-worth investor and consumer. Sign up to receive future editions, straight to your inbox.
    Family offices are ramping up the war for talent, creating new incentive plans for top executives that are boosting pay, according to a new report.

    A majority of family offices are now using long-term incentive compensation plans, which increase total pay based on performance and investment returns, according to a report from Morgan Stanley Private Wealth Management and Botoff Consulting. Nearly two-thirds of investment-focused family offices are using long-term incentive compensation, according to the report.
    While family offices — the private investment firms of the ultra wealthy — have often given special performance bonuses to executives, the awards are becoming more structured and clear.
    “Over time, we are seeing an increased formalization of compensation plans,” said Valerie Wong Fountain, managing director and head of family office resources platform and partner management at Morgan Stanley. “If you go back a number of years, you may have seen more handshake agreements. Now it’s more structured and measured against performance.”

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    At investment-focused family offices — which are more like in-house financial firms, with more specialized teams — the median total compensation for CEOs is $825,000 a year, according to the report. Larger investment-focused family offices, with over $1 billion in assets, are paying a median of over $1.2 million. Soaring pay at the very top of investment-focused firms has pushed average pay for $1 billion-plus CEOs to over $3 million a year, according to the report.
    Chief investment officers, or CIOs, are also benefiting. Median pay for investment-focused CIOs is now $900,000, with the average at $1.8 million.

    The incentive plans are also changing. Co-investments are becoming especially popular, allowing executives to invest alongside the family in deals. Since wealthy families often get special access to other companies and deals, the opportunity to invest alongside the family is an added bonus.
    The other common incentive plans include carried interest, where the executive gets a share of the investment gains beyond a benchmark, as well as phantom equity, profit sharing and deferred incentive plans. More

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    Ray Dalio sells his last remaining stake in Bridgewater, steps away from hedge fund’s board

    Ray Dalio, founder of Bridgewater Associates LP, speaks during the Milken Institute Asia Summit in Singapore, on Wednesday, Sept. 18, 2024. The size of the Federal Reserve’s interest rate cut this week won’t be a game changer for global investors, though risks from China’s slowdown continue to weigh on their minds, according to participants at the regional forum. Photographer: Ore Huiying/Bloomberg via Getty Images
    Bloomberg | Bloomberg | Getty Images

    Ray Dalio, founder of one of the biggest hedge funds Bridgewater, has dumped his remaining shares in the firm and stepped aside from its board.
    Bridgewater completed the final sale of Dalio’s equity shares, wrapping up his management transition started in 2022, according to a person familiar with the matter. Dalio will continue to be a significant investor in Bridgewater’s strategies and a mentor, the person said.

    The billionaire has been selling his equity for years. To facilitate the final transition of his ownership, Bridgewater raised capital from existing investors and employees. Co-CIOs Bob Prince and Greg Jensen are two significant equity holders, the person said.
    “We share our congratulations to Ray – he will always be our cherished founder, is a mentor to many, and remains a longstanding client with significant investments in Bridgewater’s strategies,” Bridgewater CEO Nir Bar Dea and Co-Chair Mike McGavick said in a July 21 letter to clients seen by CNBC. “Ray has always described the transition as a ‘dream come true’ and we’re excited to have made it a reality together.”
    The Wall Street Journal first reported Dalio’s stake sale. The founder seemingly confirmed the transition in a LinkedIn post.
    Dalio, who founded Bridgewater in 1975, has focused on macro strategies, such as trading currency and fixed income markets based on economic trends. Dalio stepped down as Bridgewater’s chief executive officer in 2017 and chairman at the end of 2021.
    Bridgewater enjoyed solid gains in the first half of 2025, with its Pure Alpha fund up 17% and its All Weather fund rising 8%, the person said. More

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    Emergency funds are a ‘security blanket’ for 401(k) savings, Vanguard researcher says. Here’s why

    Workers with emergency funds of at least $2,000 are less likely to raid their 401(k) accounts, according to Vanguard research.
    401(k) “leakage,” such as cashing out an account upon job separation, hurts households’ retirement security, experts said.
    Saving even $10 to $25 per paycheck into an emergency fund can make a difference.

    Ingwervanille | Moment | Getty Images

    Setting aside money in a rainy-day fund can bolster households’ retirement prospects down the road, especially for hourly workers with inconsistent income streams, experts said.
    Emergency funds are a “security blanket,” said Fiona Greig, global head of investor research and policy at Vanguard Group, an asset manager.

    That’s because they offer a cash buffer for people who might otherwise raid their 401(k) accounts to pay for unforeseen expenses in the short term, she said.
    401(k) investors with at least $2,000 of emergency savings are less likely than those without rainy-day funds to tap their retirement plans early, according to new Vanguard research.

    Specifically, they are 19 percentage points less likely to take a 401(k) loan and 17 points less likely to withdraw 401(k) funds for a financial hardship, Vanguard found.
    Leaving a job is another trigger that allows workers to access their 401(k) savings before retirement age. Job-switchers who have emergency funds are 43 percentage points less likely to cash out their 401(k) accounts than those without, according to Vanguard.
    “Emergency savings protect retirement savings,” Greig said.

    Retirement savers with emergency funds also save a greater share of their incomes — 2.2 percentage points more — in a 401(k) relative to those without them, Vanguard found.  

    401(k) ‘leakage’ is a large concern

    Riska | E+ | Getty Images

    Policymakers view so-called “leakage” from 401(k) plans — especially cash-outs — as a big impediment to retirement security.
    Withdrawing 401(k) assets early generally comes with tax penalties and shortchanges investors, who forgo years of investment earnings on withdrawn funds, experts said.
    There would be roughly $2 trillion of additional savings in 401(k) plans over a 40-year period if workers didn’t prematurely cash out their accounts, the Employee Benefit Research Institute estimated in a 2019 paper.
    More from Personal Finance:Senate introduces bill for tariff rebate checks after Trump suggestionWhat Fed interest rate move means for your debtEven many high-earning Americans don’t feel wealthy
    Leakage is an especially large concern for hourly workers, Vanguard’s Greig said.
    Hourly workers are less likely to have emergency funds and more likely than salaried employees to tap their 401(k) savings early, Greig said.
    (That’s not just because hourly workers also tend to be lower earners, she said. The trend persists even when comparing hourly and salaried workers with similar incomes, according to Vanguard’s research.)
    Hourly workers have more volatile incomes, Greig said. Without an emergency buffer, they may need to tap their 401(k) if cash flow decreases unexpectedly, she said.

    How to build an emergency fund

    Ideally, households would set aside enough money to cover three to six months of expenses (like a mortgage and groceries) in an emergency fund, said Carolyn McClanahan, a certified financial planner based in Jacksonville, Florida, and a member of CNBC’s Financial Advisor Council.
    However, for households barely making enough to make ends meet, anything helps, McClanahan said.
    Financial planners generally recommend stashing an emergency fund in a conservative, liquid account like a high-yield savings account or money market fund, which earn more interest than a traditional bank checking account.

    Cash-strapped savers can start by diverting as little as perhaps $10 to $25 per paycheck into an emergency fund, McClanahan said.
    “Let it grow and before you know it that money will be worth something,” she said.
    Workers should automate the savings, either by asking their employer to send a certain amount to their designated emergency account each pay period or by setting up an automatic transfer from their bank account, McClanahan said.
    Workers should also strive to save at least half of any financial windfall like a bonus or tax refund, she said. More

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    TikTok took the world by storm. Now, Chinese companies are taking videos further with AI

    “Competition in AI video generation models is at an earlier stage, and some Chinese companies have emerged as early leaders in this space,” said Wei Xiong, China internet analyst at UBS Securities.
    “Whether it’s user scale or commercial revenue, overseas accounts for the majority,” Zeng Yushen, head of operations at Kling AI, a video generation tool.
    But analysts caution that AI still has limits in creating content audiences like.

    Kuaishou’s Kling AI platform generates video from text and still images.
    Nurphoto | Nurphoto | Getty Images

    BEIJING — China’s video-heavy entertainment world has yielded a trove of data for companies — and they’re now ramping up money-making artificial intelligence tools for generating ads and film clips.
    TikTok parent ByteDance holds the first and third spots in research firm Artificial Analysis’ top-ranked text-to-video generative AI models, which were launched in the last two months. Google holds the second and fourth spots, while Beijing-based short video app Kuaishou’s Kling AI ranks fifth.

    Despite some consolidation in other parts of the AI industry, “competition in AI video generation models is at an earlier stage, and some Chinese companies have emerged as early leaders in this space,” said Wei Xiong, China internet analyst at UBS Securities.
    “We believe AI video generation has the potential to reshape the content industry,” she said, “by enhancing production efficiency, lowering barriers to creation and unlocking new monetization models.”
    With such AI tools, users can upload a single image or multiple ones, and direct the AI to generate a video clip based on them. Other tools allow users to enter text, from which the AI will generate the video clip.
    More than 20,000 businesses from advertisers to movie animators already use Kling AI for generating video, the Beijing-based company claimed this week during the World AI Conference in Shanghai. The latest version, Kling 2.1, can automatically add relevant sound effects to match the AI-generated video.
    It’s not just for users in China.

    “Whether it’s user scale or commercial revenue, overseas accounts for the majority,” Zeng Yushen, head of operations at Kling AI, told CNBC in Mandarin, translated by CNBC. She said the company plans to enhance its support for the tool in places such as Japan, South Korea and Europe.
    “This is something we’ve observed, AI big models are increasingly globalized,” she said. “People don’t seem to care which country’s product it is.”

    Kuaishou claimed Kling AI made over 150 million yuan ($20.83 million) in revenue in the first three months of the year, and that daily advertising spend on generative AI tools was 30 million yuan during that time. The company has yet to announce when it will release second-quarter results. Zeng declined to share Kling AI’s model training costs.
    While the reduced production cost implies a “sizeable” market, UBS’ Xiong said, “current model capabilities remain constrained by clip length, motion consistency and controllability.”
    Chinese video AI companies also face competition from the U.S., beyond the Trump administration’s restrictions on China’s access to advanced semiconductors needed for training AI models.
    Amazon and Google have launched tools for generating video from images or text. The releases come as Microsoft-backed OpenAI launched its video generation model Sora to ChatGPT subscribers in December — nearly a year after it had revealed its capabilities in February 2024.
    However, Kling AI had already launched to the public in June 2024. Users subscribe and buy credits to generate videos.
    Vidu, a rival tool from Beijing-based startup Shengshu, launched to global users roughly 12 months ago, and around March this year said it expected annual revenue of $20 million based on user subscription fees.
    “Chinese firms tend to attempt to first identify a commercial ‘pain point’ …, areas where companies will pay for services, which has been a challenge for AI applications,” said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group.
    He pointed to how Chinese startup 3DStyle uses generative AI to design new clothing styles and integrate them with internet-connected, automated manufacturing.
    U.S. companies have also been applying AI to specific industries, Triolo said, but Chinese businesses are often able to integrate AI more quickly because they face a very competitive environment and can recruit from a “very qualified” local base of software engineers.

    ‘AI as filmmaker’

    Chinese e-commerce giant Alibaba has also stayed on top of the trend by releasing the latest version of its video generation AI model this week called Wan2.2. The company claimed that with the open-source model, users can control lighting, time of day, color tone, camera angle, frame size, composition and focal length.
    Open source allows users to download a model for free, and customize, if not commercialize, products with it. Alibaba claimed that since open sourcing the “Wan” model series in February, the models have been downloaded more than 5.4 million times from the Hugging Face platform and a similar one in China called ModelScope.

    “The age of AI in film is over. We’ve entered the age of AI as filmmaker,” said Winston Ma, adjunct professor at NYU School of Law. He pointed out that China’s 1.4 billion population has given local companies “enormous” amounts of video-watching data to work with.
    “Just like TikTok took the global markets by storm with short videos in the mobile internet age, Chinese AI companies could well lead the Generative AI revolution in visual digital entertainment,” said Ma, author of “The Digital War: How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace.”

    Avatars and gaming

    Chinese companies are also building AI tools for more than just generating videos.
    In the past week, Baidu announced that its newest AI-powered digital human technology — which powered sales of $7.65 million during an interactive livestreaming session of over six hours in June — would be released for broader industry use in October.
    In 3D visualization, Tencent released its Hunyuan World model for creating digital panoramic images of scenes, generated from text and visual prompts. The visuals use a “mesh” file format which gamer developers can then use to edit specific parts of the image.
    “Beyond supporting [Tencent’s] internal development teams, the platform demonstrates Tencent’s ambition to standardize high-fidelity game asset generation and expand its influence across China’s game development landscape,” said Daniel Ahmad, director of research and insights at Niko Partners.

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    Niko found that more than half of game development studios in China already use AI for content generation and reducing development time and costs.
    But game development reflects broader challenges in using AI at scale for generating videos and graphics.
    “While interest in AI is high,” Ahmad said, “we’ve already seen some backlash to games that have poorly implemented the technology.” More

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    Trump says he asked 17 drugmakers to take steps to cut U.S. prices within 60 days

    President Donald Trump said he asked major pharmaceutical companies to take steps to cut U.S. drug prices within the next 60 days.
    On Truth Social, Trump posted individual letters he sent 17 drugmakers, including Eli Lilly, GSK, Pfizer, Regeneron, Merck, Pfizer and Novo Nordisk.
    It comes after Trump in May signed an executive order reviving a controversial policy that aims to slash drug costs by tying the prices of some medicine in the U.S. to the significantly lower ones abroad.

    U.S. President Donald Trump, U.S. Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr., Dr. Mehmet Oz, Administrator for the Centers for Medicare & Medicaid Services, David Sacks, AI & Crypto Czar and Amy Gleason, Acting Administrator, Department of Government Efficiency (DOGE) attend the “Making Health Technology Great Again” event in the East Room at the White House in Washington, D.C., U.S., July 30, 2025.
    Evelyn Hockstein | Reuters

    President Donald Trump on Thursday said he asked major pharmaceutical companies to take steps to cut U.S. drug prices within the next 60 days.
    On Truth Social on Thursday, Trump posted individual letters he sent 17 drugmakers: AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, EMD Serono, Genentech, Gilead, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron, and Sanofi.

    Trump threatened to “deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices” if companies refuse to comply. He asked for each company to commit to his several goals by Sept. 29.
    The letters come after Trump in May signed an executive order reviving a controversial plan, known as the “most favored nation” policy, that aims to slash drug costs by tying the prices of some medicines in the U.S. to the significantly lower ones abroad. It was Trump’s latest effort to try to rein in U.S. prescription drug prices, which are two to three times higher on average than those in other developed nations – and up to 10 times more than in certain countries, according to the Rand Corp., a public policy think tank.

    White House Press Secretary Karoline Leavitt holds U.S. President Donald Trump’s letter to Eli Lilly CEO David Ricks during a press briefing at the White House in Washington, D.C., U.S., July 31, 2025.
    Evelyn Hockstein | Reuters

    In the letters on Thursday, Trump said drugmakers have proposed potential solutions for high U.S. drug prices. But he said those proposals “promised more of the same: shifting blame and requesting policy changes that would result in billions of dollars in handouts to the industry.”
    He said moving forward, he will only accept commitments from drugmakers that provide “American families immediate relief from the vastly inflated drug prices and an end to the free ride of American innovation by European and other developed nations.” Trump said a collaborative effort towards lowering U.S. drug prices would be the “most effective path” for companies, the government and patients.
    Shares of drugmakers fell following the announcement on Thursday. Shares of Bristol Myers Squibb and Novo Nordisk dropped nearly 5%, GSK and Merck’s stocks fell more than 3% and shares of Sanofi tumbled more than 8%.

    Here are the steps Trump is asking companies to take:

    He called on drugmakers to provide their full portfolio of existing medicines at the lowest price offered in other developed nations – or what he calls the most-favored-nation price – to every single Medicaid patient.
    Trump also asked companies to contract with the U.S. to guarantee that Medicare, Medicaid and commercial payers receive most-favored-nation prices on all new drugs upon launch and moving forward.
    He called on companies to negotiate harder with what he called “foreign freeloading nations,” adding that U.S. trade policy will try to support that effort. He said increased revenues abroad must be “repatriated to lower drug prices” for American patients and taxpayers through an agreement with the U.S.
    He asked drugmakers to adopt models that sell their medicines directly to consumers or businesses, which effectively eliminates middlemen and aims to ensure that all Americans get the same most-favored nation prices that companies offer to third-party payers.

    Alex Schriver, senior vice president of PhRMA, the industry’s largest lobbying group, said “importing foreign price controls would undermine American leadership, hurting patients and workers.”
    The group added that to reduce price differences with other countries, U.S. officials should “rein in health care middlemen driving up costs for Americans and get foreign countries to pay their fair share for innovative medicines.” PhRMA is referring to pharmacy benefit managers, insurers and other payers.
    In separate statements, spokespeople for Pfizer, Novo Nordisk and Novartis said they are working to find solutions that help Americans access and afford drugs they need.
    Pfizer said that the company’s discussions with the Trump administration and Congress “have been productive.” Novartis said it is reviewing the letter.
    The announcement comes just days after AstraZeneca said it has proposed price cuts to certain drugs in the U.S., and that the Trump administration is considering those proposals. AstraZeneca added that it is considering selling some drugs to patients directly, which is a move that companies like Eli Lilly, Novo Nordisk, Pfizer and Bristol Myers Squibb have adopted as patients struggle to afford drugs in the U.S.
    Drugmakers are also bracing for the president’s planned tariffs on pharmaceuticals imported into the U.S. More