The Trump administration appears poised to introduce a new regulatory framework that could compel drug manufacturers to drastically lower their prices in the United States. This move would bring U.S. drug costs in line with those found in other wealthy nations, according to a recent government notice that was briefly posted online before being removed.
The deleted notice referenced a “proposed rule” and a “global benchmark for efficient drug pricing (GLOBE) model,” originating from the Department of Health and Human Services. While the specifics of the proposal and the reason for its swift removal remain unclear, it strongly indicates a more aggressive stance on drug pricing is on the horizon.
Andrew Nixon, a spokesperson for the health department, declined to comment, stating that the administration does not discuss potential future regulations.
This isn’t President Trump’s first foray into this arena. He has consistently advocated for a system where American consumers pay no more for medications than what other developed countries pay. During his initial term, he frequently discussed such strategies. His Medicare agency even attempted to pilot a similar initiative for a select group of drugs in 2020. However, that effort was put on hold by the courts and eventually abandoned by the Biden administration.
Should the administration proceed with this plan to regulate drug prices, it will undoubtedly trigger a fresh wave of legal challenges from pharmaceutical companies. These corporations have historically fought against such proposals, fearing significant impacts on their profit margins.
Alex Schriver, a spokesperson for the trade group PhRMA, asserted that “Importing foreign price controls would undermine American leadership, hurting patients and workers.” He suggested that a more equitable solution would be for other countries to “pay their fair share for innovative medicines.”
Back in July, Mr. Trump had issued an ultimatum, setting a September 29 deadline for drugmakers to voluntarily reduce their prices, echoing a demand from an earlier executive order in May. That order explicitly warned that if voluntary efforts fell short, the Trump administration might propose a rule-making plan to enforce “most-favored-nation pricing.” This policy would essentially force U.S. prices to match the lowest prices offered to peer nations.
During a news conference on Monday, where he discussed Tylenol and autism, Mr. Trump reiterated his commitment to drug pricing reform, promising substantial price cuts. “We subsidize the rest of the world,” he declared. “We’re not doing that anymore.”
Mr. Trump’s previous attempt to leverage international prices for U.S. drug costs, implemented during his first term, aimed to link Medicare’s payment for specific drugs to the lowest prices in a group of comparable nations. However, this initiative only applied to a limited category of drugs directly administered by doctors, like chemotherapy. Courts blocked the policy due to procedural issues, rather than ruling on its legality.
This earlier attempt drew its authority from a special provision within Obamacare, which empowered Medicare and Medicaid to test innovative programs designed to enhance healthcare quality and reduce costs. The “innovation center” was tasked with developing and evaluating these demonstration projects. Yet, the project’s broad, mandatory nature led to legal challenges, as it was deemed not a true experiment.
In recent weeks, several drugmakers have made concessions in an apparent bid to appease Mr. Trump, though none have fully committed to lowering the final prices paid by U.S. government programs, employers, and insurers.
Eli Lilly, for instance, announced it would increase the sticker price of Mounjaro, its popular weight-loss drug, in Britain.
Bristol Myers Squibb also announced this week its intention to price a new schizophrenia treatment in Britain identically to its U.S. sticker price. The company further embraced another of Mr. Trump’s demands by launching a direct-to-patient sales model for its widely used blood thinner, Eliquis, bypassing traditional insurance channels.
The prospect of a mandate that would force U.S. drug prices down to European levels represents the pharmaceutical industry’s most significant concern, as it faces numerous threats to its established business model from the Trump administration. Earlier this month, Trump officials indicated they would pursue regulations that could ban drug advertisements on television. The industry also remains anxious about the potential for Mr. Trump’s long-promised tariffs on imported medications.
In his current term, Mr. Trump has adopted a less direct approach to drug price controls compared to his first term. His focus has shifted to executive orders and public statements, urging pharmaceutical companies to voluntarily adjust prices both domestically and internationally to achieve greater parity.
In letters sent to drugmakers in July, he demanded lower prices for “every single” patient covered by Medicaid, the federal insurance program for low-income and disabled Americans. He extended this demand to “all new drugs” across both government and commercial insurance, implying that existing drugs, aside from those covered by Medicaid, might be exempted.
On average, brand-name drug prices in the United States are three times higher than those in comparable nations. These elevated U.S. prices, coupled with the vast size of the American market, are crucial to the industry’s business model. Mr. Trump and his allies frequently label this situation as unfair.
In wealthy countries such as those in Europe, governments engage in aggressive negotiations with drugmakers and have shown a willingness to decline new medicines if prices are deemed too high.
Conversely, there is significantly less inclination in the United States to deny patients access to new drugs. In the U.S., drug prices typically start very high and only see substantial reductions when multiple patent-protected products enter the market, competing for the same patient base.
Legislation enacted during the Biden administration permits Medicare to negotiate prices for a limited number of older prescription drugs each year, but its scope remains restricted.
Both drugmakers and Trump administration officials have found common ground in the belief that European countries pay too little for pharmaceuticals. In a recent podcast interview, Commerce Secretary Howard Lutnick criticized Switzerland, home to major multinational drug companies like Roche and Novartis, which derive significant profits from their U.S. sales. “They make so much money off America, that’s why they’re rich,” he stated.
Pascal Soriot, AstraZeneca’s chief executive, told reporters in July that he concurred with the president regarding the need to equalize drug prices between the U.S. and its international counterparts. He emphasized that research and development costs “should be shared more fairly across rich countries.”