The Trump administration appears poised to introduce a new regulatory framework aimed at compelling pharmaceutical manufacturers to lower drug prices in the U.S., aligning them with the significantly reduced rates found in other affluent nations. This intention was revealed through a notice recently published on a federal website.
This intriguing notice, which mysteriously appeared, was removed for several hours, and then reappeared on Thursday, outlines a “proposed rule” and a “global benchmark for efficient drug pricing (GLOBE) model” to be overseen by the Department of Health and Human Services. The exact details of this proposal, along with the reasons for its brief disappearance, remain unclear.
Andrew Nixon, a spokesperson for the health department, declined to comment on the matter, stating that the administration does not discuss “potential future regulations.” News outlets had previously reported on this notice earlier on Thursday.
President Trump has consistently advocated for a system where American consumers and healthcare payers would benefit from drug prices on par with the lowest rates offered in comparable developed nations. This concept was a frequent topic of discussion during his first presidential term. In 2020, his Medicare agency even initiated a pilot program to test this pricing model on a limited selection of drugs; however, this policy was ultimately halted by legal challenges and subsequently revoked by the Biden administration.
Should the administration proceed with this plan for drug price regulation, it is almost certain to trigger a wave of legal battles from pharmaceutical giants. These companies have historically and vehemently resisted such proposals, fearing significant impacts on their profitability.
Alex Schriver, a spokesperson for the trade group PhRMA, issued a statement arguing that “importing foreign price controls would undermine American leadership, hurting patients and workers.” He suggested that a more effective solution would be to compel “foreign countries to pay their fair share for innovative medicines,” rather than imposing price caps domestically.
Back in July, President Trump issued an ultimatum to drugmakers, setting a September 29th deadline for them to voluntarily reduce their prices, a demand previously outlined in an executive order from May. This order explicitly warned that if voluntary efforts failed to sufficiently lower U.S. drug costs, the administration might “propose a rule-making plan to impose most-favored-nation pricing.” This strategy aims to ensure that U.S. drug prices are no higher than those paid by other advanced economies.
During a Monday news conference, where the primary topic was Tylenol and autism, President Trump briefly pivoted to his drug pricing agenda. He asserted that his plans would lead to massive price reductions, declaring, “We subsidize the rest of the world. We’re not doing that anymore.”
In a prior effort during his first term, Mr. Trump attempted to link Medicare drug prices in the U.S. to the lowest rates found in other developed countries. However, this initiative was limited to specific drugs administered directly by doctors, like certain chemotherapy or rheumatoid arthritis treatments. While courts ultimately blocked the policy due to procedural concerns, they did not rule on the legality of the pricing concept itself.
This earlier initiative leveraged a special authority within Obamacare, which permits Medicare and Medicaid to pilot innovative programs aimed at enhancing healthcare quality and reducing costs. Though the “innovation center” is designed to create and assess demonstration projects, this particular plan was implemented as mandatory across the board, which opened it up to legal challenges arguing it wasn’t a genuine “experiment.”
In recent weeks, several pharmaceutical companies have announced measures seemingly designed to mollify President Trump. However, these actions have notably fallen short of explicit commitments to reduce the actual final prices paid by U.S. government healthcare programs, employers, and private insurers.
For instance, Eli Lilly announced plans to increase the list price of its widely popular weight-loss medication, Mounjaro, in Britain.
Similarly, Bristol Myers Squibb revealed this week its intention to introduce a new schizophrenia treatment in Britain with a sticker price identical to its U.S. cost. Furthermore, the company recently adopted one of Mr. Trump’s key demands by launching a program allowing direct-to-patient sales of its popular blood thinner, Eliquis, bypassing traditional insurance channels.
Among the various pressures from the Trump administration, the potential mandate to align U.S. drug prices with European levels represents the pharmaceutical industry’s most significant worry, threatening its core business model. Earlier this month, Trump officials also indicated a move towards regulations that could restrict televised drug advertisements. The industry is also preparing for the potential imposition of President Trump’s long-discussed tariffs on imported pharmaceuticals.
During his current term, President Trump has been less overt in his advocacy for direct drug price controls compared to his first term. Instead, his focus has shifted to issuing executive orders and delivering speeches that press pharmaceutical companies to voluntarily harmonize drug prices both within the U.S. and internationally.
In letters sent to drug manufacturers in July, he specifically called for reduced prices for “every single” patient enrolled in Medicaid, the government’s insurance program for low-income and disabled citizens. He extended this demand to “all new drugs” across both government and commercial insurance sectors, though he implied that existing market drugs, excluding those for Medicaid, might be exempt.
On average, brand-name drug prices in the United States are three times higher than those in comparable nations. This significant pricing disparity, coupled with the immense size of the U.S. market, forms the bedrock of the pharmaceutical industry’s financial model. President Trump and his supporters have frequently characterized this situation as fundamentally unfair.
Conversely, governments in other prosperous countries, particularly in Europe, are known for their aggressive stance in drug price negotiations, often prepared to refuse a product if its cost is deemed excessive.
In the U.S., there’s a considerably lower inclination to restrict patient access to innovative drugs. Consequently, medication prices here typically begin at a very high point and only see substantial reductions when multiple patent-protected products enter the market, fostering competition for the same patient base.
Current legislation, enacted under the Biden administration, grants Medicare the power to negotiate prices for a limited selection of older prescription drugs annually, though this authority has a restricted scope.
Interestingly, both pharmaceutical companies and Trump administration officials agree on one point: European countries are not paying enough for medicines. For instance, in a recent podcast interview, Commerce Secretary Howard Lutnick specifically criticized Switzerland, home to major multinational drug manufacturers like Roche and Novartis, which accrue substantial profits from their U.S. sales.
Lutnick asserted, “They sell us pharmaceuticals like it’s going out of style, right? They make so much money off America, that’s why they’re rich.”
Echoing this sentiment, AstraZeneca’s chief executive, Pascal Soriot, informed reporters in July that he concurs with the President’s goal of equalizing drug prices between the U.S. and its counterparts, advocating that research and development expenses “should be shared more fairly across rich countries.”