The Trump administration appears poised to introduce new regulations aimed at compelling pharmaceutical companies to lower drug prices in the United States. This potential move would align US medication costs with the significantly lower rates found in other affluent nations, according to a recent notice on a federal website.
This intriguing notice, initially published, then abruptly removed for several hours on Thursday before reappearing, outlines a “proposed rule” and a “global benchmark for efficient drug pricing (GLOBE) model” managed by the Department of Health and Human Services. The specific details of this proposal, as well as the reason for its temporary deletion, remain vague.
Andrew Nixon, a spokesperson for the Health Department, chose not to elaborate on the matter, stating that the administration refrains from commenting on “potential future regulations.” It was Reuters who first brought attention to this notice on Thursday.
For a long time, President Trump has advocated for a system where US consumers and insurers would pay the same low drug prices as those in comparable wealthy nations. Throughout his first presidential term, he frequently discussed this approach. In 2020, his Medicare agency even initiated a pilot program to test this concept with a select group of medications. However, this policy was eventually halted by legal challenges and subsequently rescinded by the Biden administration.
Should the administration proceed with this drug pricing regulation, it will almost certainly trigger a fresh wave of lawsuits from pharmaceutical companies. These corporations have historically and vehemently opposed such measures, recognizing the severe impact they would have on their profit margins.
In a statement, Alex Schriver, a spokesperson for the pharmaceutical trade group PhRMA, argued that “Importing foreign price controls would undermine American leadership, hurting patients and workers.” He suggested a more effective solution to price disparities would be to “get foreign countries to pay their fair share for innovative medicines.”
Back in July, Mr. Trump had already issued an ultimatum, setting a September 29 deadline for drugmakers to voluntarily decrease their prices. This demand stemmed from an executive order in May, which explicitly stated that if voluntary efforts failed to sufficiently reduce US drug costs, his administration might “propose a rule-making plan to impose most-favored-nation pricing.” This concept entails adjusting US prices to match the lowest rates offered in other comparable countries.
During a Monday news conference, primarily centered on Tylenol and autism, Mr. Trump seized the opportunity to discuss his drug pricing initiatives. He asserted that these plans would lead to massive price reductions, declaring, “We subsidize the rest of the world. We’re not doing that anymore.”
Mr. Trump’s prior endeavor during his first term aimed to benchmark US drug prices against international rates. Specifically, it sought to link what Medicare paid for certain medications, like chemotherapy or rheumatoid arthritis infusions, to the lowest prices observed in other developed countries. However, this initiative was legally challenged and ultimately blocked due to procedural flaws, not a ruling on the legality of the pricing policy itself.
This particular effort leveraged a special authority provided to Medicare and Medicaid through Obamacare, intended for testing innovative programs to enhance healthcare quality and reduce costs. While the designated “innovation center” is responsible for developing and evaluating such demonstration projects, this specific initiative was implemented as mandatory nationwide. This broad application opened it up to legal challenges, as it was argued that it no longer constituted a genuine experiment.
In recent weeks, several major pharmaceutical companies have announced various measures, seemingly in an attempt to mollify Mr. Trump. Yet, none of these actions have included an actual commitment to reduce the final prices paid by US government programs, employers, and private insurers.
For instance, Eli Lilly declared its intention to increase the list price of Mounjaro, its widely-used weight-loss drug, in Britain.
This week, Bristol Myers Squibb announced plans to introduce a new schizophrenia treatment in Britain at the same list price as in the US. The company also recently adopted another of Mr. Trump’s directives: offering a direct-to-patient sales model for its commonly prescribed blood thinner, Eliquis, bypassing traditional insurance channels.
An enforced mandate to bring US drug prices down to European levels represents arguably the pharmaceutical industry’s most significant worry, especially as the Trump administration continues to challenge its established business model. Earlier this month, Trump officials indicated they would pursue regulations that could remove drug advertisements from television. Furthermore, the industry remains on edge, anticipating Mr. Trump’s long-standing threats of tariffs on imported medicines.
Throughout his current term, Mr. Trump has adopted a less direct approach to advocating for drug price controls compared to his first. His focus has primarily been on issuing executive orders and delivering speeches that pressure pharmaceutical firms to voluntarily adjust their US and international prices, aiming for greater equity.
In July, through letters sent to drugmakers, Mr. Trump specifically demanded price reductions for “every single” patient enrolled in Medicaid, the government’s insurance program for low-income and disabled individuals. He extended this demand to “all new drugs” covered by both government and commercial insurance plans, implying that existing medications, excluding those for Medicaid, would not be subject to these new mandates.
On average, brand-name pharmaceutical prices in the United States are three times higher than in comparable nations. These inflated US prices, coupled with the sheer size of the American market, are fundamental to the industry’s profitability. Mr. Trump and his supporters have consistently labeled this disparity as unfair.
Conversely, governments in many affluent countries, particularly in Europe, engage in tough negotiations with drug manufacturers and have demonstrated a readiness to reject medications if their prices are deemed excessive.
In contrast, there is a considerably lower inclination to withhold new drugs from patients in the United States. Here, medication prices typically begin at a very high point and rarely see significant reductions until several patent-protected products enter the market, fostering competition for the same patient base.
Although legislation from the Biden administration permits Medicare to negotiate prices for a limited selection of older prescription drugs annually, this authority’s overall impact remains constrained.
Both pharmaceutical companies and Trump administration officials generally agree that European nations are not paying enough for medications. In a recent podcast interview, Commerce Secretary Howard Lutnick specifically criticized Switzerland, home to major multinational drugmakers like Roche and Novartis, which accrue substantial profits from their sales within the US market.
Lutnick remarked, “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.”
Pascal Soriot, AstraZeneca’s chief executive, echoed this sentiment in July, telling reporters that he concurred with the president on the need to equalize drug prices between the US and its counterparts. He stressed that research and development expenses “should be shared more fairly across rich countries.”