Drug stocks fell suddenly on Thursday on the back of a report that President Donald Trump was ready to issue an executive order aimed at lowering drug prices.

The iShares Nasdaq Biotechnology ETF (IBB) hit session lows and traded 1.1 percent lower after Bloomberg reported, citing people familiar with the matter, that the administration could move on the matter within weeks.

The White House had no comment on the report.

Allergan CEO Brent Saunders said Thursday he has heard rumors about what Trump's executive order may include.

"One thing that we hear is on the table for an executive order is the directive for the Trump administration to move towards value-based contracting for pharmaceutical purchasing. I think that is a good, positive, constructive outcome for the industry and for patients," Saunders told CNBC's "Power Lunch."

Drug pricing has been a key issue for Trump as his administration tries to repeal and replace Obamacare. Earlier this year, the IBB tumbled after Trump teased in a tweet that drug prices would be coming "way down."

IBB intraday chart

Source: FactSet

—CNBC's Eamon Javers contributed to this report.