The Trump administration appears poised to introduce a new regulatory framework that could compel pharmaceutical companies to reduce drug prices in the United States, aligning them with the significantly lower rates found in other developed nations. This indication comes from a recently published federal notice.
This intriguing notice, initially posted, then mysteriously removed for several hours on Thursday before reappearing, outlines a “proposed rule” for a “global benchmark for efficient drug pricing (GLOBE) model” under the Department of Health and Human Services. The specifics of the proposal and the reason for its temporary deletion remain undisclosed.
Andrew Nixon, a spokesperson for the health department, declined to comment on the matter, citing a policy against discussing “potential future regulations.” Reuters had previously reported on the notice.
For years, President Trump has advocated for a system where American consumers and insurers would pay drug prices comparable to the lowest rates offered in other prosperous nations. He frequently discussed this concept during his initial presidential term. In 2020, his Medicare agency even initiated a pilot program to test this pricing strategy for a limited selection of drugs, though this initiative was ultimately halted by legal challenges and subsequently revoked by the Biden administration.
Should the administration proceed with this drug pricing regulation, it will almost certainly trigger extensive 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, asserted that “importing foreign price controls would undermine American leadership, hurting patients and workers.” He argued that a more effective solution to disparities in drug costs would be to encourage “foreign countries to pay their fair share for innovative medicines.”
This past July, President Trump issued an ultimatum, setting a September 29th deadline for drug manufacturers to voluntarily reduce their prices, reiterating a request from an executive order in May. That order warned that a lack of sufficient voluntary price reductions could lead the administration to “propose a rule-making plan to impose most-favored-nation pricing.” This strategy would effectively align U.S. drug prices with the lowest rates offered to other nations.
During a Monday news conference, primarily discussing Tylenol and autism, President Trump veered to his drug pricing initiatives, promising substantial reductions. He declared, “We subsidize the rest of the world. We’re not doing that anymore,” emphasizing his resolve.
In his earlier presidential term, Trump attempted to link Medicare’s payment for specific drugs to the lowest prices observed in comparable nations. However, this policy was restricted to only a small category of physician-administered drugs, like those for chemotherapy or rheumatoid arthritis. While the policy faced legal obstacles due to procedural flaws and was blocked by courts, the fundamental legality of the pricing mechanism itself was never decided.
This past initiative leveraged a special authority within Obamacare, allowing Medicare and Medicaid to pilot innovative programs aimed at enhancing healthcare quality and reducing costs. However, the ‘innovation center’ project, intended for demonstration and evaluation, was controversially implemented as a mandatory, widespread policy, thus exposing it to legal challenges questioning its experimental nature.
Recently, several pharmaceutical companies have issued statements seemingly designed to placate President Trump. Yet, these announcements have conspicuously avoided firm commitments to reduce the ultimate prices paid by U.S. government programs, employers, and private insurers.
For instance, Eli Lilly declared it would increase the list price of its widely used weight-loss medication, Mounjaro, in Britain.
This week, Bristol Myers Squibb announced intentions to match the U.S. list price for a new schizophrenia treatment in Britain. Furthermore, the company recently adopted one of President Trump’s prior demands—enabling direct-to-patient sales without insurance for its popular blood thinner, Eliquis.
Among the many pressures on its business model from the Trump administration, the pharmaceutical industry’s primary apprehension is a potential mandate that would align U.S. drug prices with European levels. Earlier this month, Trump officials also signaled a move towards regulations that could ban pharmaceutical advertisements from television. Moreover, the industry remains on edge regarding the President’s long-standing promise of imposing tariffs on imported medicines.
During his current term, President Trump has taken a less overt approach to advocating for drug price controls compared to his first term. His focus has primarily been on issuing executive orders and delivering speeches, urging pharmaceutical companies to voluntarily standardize their prices in the U.S. and internationally.
In July, his letters to drugmakers specifically called for reduced prices for “every single” Medicaid beneficiary, the government insurance program supporting low-income and disabled Americans. He extended this demand to “all new drugs” across both government and commercial insurance plans, implying that existing medications, excluding those for Medicaid, might be unaffected.
On average, brand-name prescription drug prices in the United States are three times higher than those in comparable developed countries. This significant price differential, coupled with the vastness of the U.S. market, forms a crucial pillar of the pharmaceutical industry’s financial strategy. President Trump and his supporters have consistently labeled this situation as unjust.
Conversely, in affluent European nations, governments engage in aggressive price negotiations with drug manufacturers, demonstrating a readiness to reject products if prices are deemed excessive.
In contrast, the United States exhibits far less willingness to restrict patient access to innovative drugs. Here, medication prices typically launch at a very high point and rarely see substantial reductions until several patent-protected products enter the market to compete for the same patient demographic.
While the Biden administration passed legislation enabling Medicare to negotiate prices for a limited selection of older prescription drugs annually, this authority’s overall impact remains restricted.
Interestingly, both pharmaceutical companies and Trump administration officials agree on one point: European nations are not paying enough for their medications. This month, Commerce Secretary Howard Lutnick, during a podcast interview, specifically criticized Switzerland, home to multinational pharmaceutical giants like Roche and Novartis, which accrue considerable 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,” highlighting his view on the current pricing structure.
Even AstraZeneca’s chief executive, Pascal Soriot, publicly agreed with President Trump in July, stating that drug research and development costs “should be shared more fairly across rich countries” to achieve more equitable pricing between the U.S. and other nations.