The Trump administration appears to be exploring a new regulatory approach aimed at compelling pharmaceutical companies to reduce prescription drug prices in the U.S. to match the lower rates seen in other affluent nations. This potential move was signaled by a recently published notice on a federal website.
This particular notice, which curiously appeared, was then removed for several hours on Thursday, only to be republished later. It mentioned a “proposed rule” and a “global benchmark for efficient drug pricing (GLOBE) model” originating from the Department of Health and Human Services. The exact details of the proposal and the reason for its temporary disappearance remain unclear.
Andrew Nixon, a spokesperson for the health department, refrained from commenting, stating that the administration does not discuss “potential future regulations.” News outlets had already reported on this notice earlier on Thursday.
This isn’t a new concept for President Trump, who has consistently advocated for a system where U.S. consumers and healthcare providers would pay drug prices no higher than the lowest rates in comparable developed nations. During his initial presidency, he frequently discussed this strategy. In 2020, his Medicare agency even initiated a pilot program to test this idea for a select group of drugs, though it was later halted by legal challenges and ultimately rescinded by the Biden administration.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 companies have historically and vehemently resisted such proposals, fearing they would severely impact their revenue and profitability.
Alex Schriver, a spokesperson for the pharmaceutical trade group PhRMA, issued a statement warning that “Importing foreign price controls would undermine American leadership, hurting patients and workers.” He suggested that a more effective solution for price disparities would involve encouraging “foreign countries to pay their fair share for innovative medicines.”
Back in July, Mr. Trump gave drugmakers until September 29th to voluntarily reduce their prices, following an executive order issued in May. This order explicitly stated that if voluntary efforts didn’t sufficiently lower U.S. drug prices, the administration might “propose a rule-making plan to impose most-favored-nation pricing.” This term signifies a policy that would adjust U.S. prices to match those in comparable countries.
During a news conference on Monday, where the topic drifted to Tylenol and autism, Mr. Trump reiterated his drug pricing agenda. He asserted that his plans would lead to massive price reductions, stating, “We subsidize the rest of the world. We’re not doing that anymore.”
His earlier attempt during his first term to leverage international drug prices involved linking Medicare’s payment for specific medications to the lowest prices observed in a group of peer nations. However, this initiative was limited to a narrow category of drugs administered directly by doctors, like chemotherapy or rheumatoid arthritis infusions. Legal challenges ultimately blocked the policy due to procedural concerns, without ever ruling on the legality of the policy itself.
This previous effort utilized a specific authority provided to Medicare and Medicaid under Obamacare, designed to pilot experimental programs aimed at enhancing healthcare quality and reducing costs. While the innovation center is responsible for creating and assessing such demonstration projects, this particular project was implemented as a mandatory, widespread policy, which made it vulnerable to legal arguments that it didn’t qualify as a genuine experiment.
In recent weeks, numerous pharmaceutical companies have made statements seemingly intended to placate Mr. Trump. However, none have explicitly pledged to reduce the ultimate prices paid by U.S. government programs, employers, or private insurers.
For example, Eli Lilly announced its intention to increase the list price of its popular weight-loss drug, Mounjaro, in Britain.
Bristol Myers Squibb revealed this week that it plans to launch a new schizophrenia treatment in Britain with the same list price as in the U.S. Additionally, the company recently adopted one of Mr. Trump’s key demands by offering its widely used blood thinner, Eliquis, directly to patients, bypassing traditional insurance channels.
The prospect of a mandate that would align U.S. drug prices with European levels represents a major threat to the pharmaceutical industry’s business model from the Trump administration. Earlier this month, Trump officials also indicated plans to introduce regulations that could ban drug advertisements from television. Furthermore, the industry is still preparing for the potential imposition of Mr. Trump’s long-discussed tariffs on imported medicines.
During his current term, Mr. Trump has been less direct about drug price controls compared to his first term. Instead, his focus has been on issuing executive orders and delivering speeches that pressure pharmaceutical companies to voluntarily harmonize their prices both domestically and internationally.
In July, he sent letters to drugmakers, insisting on lower prices for “every single” patient covered by Medicaid, the government’s program for low-income and disabled individuals. He extended this demand to “all new drugs” covered by both government and commercial insurance, implying that existing medications, excluding those covered by Medicaid, would not be subject to these new demands.
On average, brand-name prescription drug prices in the United States are three times higher than in comparable nations. This premium pricing, coupled with the vast U.S. market, is fundamental to the pharmaceutical industry’s financial model. Both Mr. Trump and his supporters have frequently characterized this disparity as unjust.
Conversely, in wealthy European countries, governments are known for their tough negotiations with drugmakers, often willing to refuse a drug if its price is deemed excessive.
In the United States, there’s a considerably lower inclination to withhold new drugs from patients. Here, initial drug prices are typically very high and only see significant reductions once several patent-protected alternatives become available and compete for the same patient base.
Legislation enacted during the Biden administration does grant Medicare the ability to negotiate prices for a limited selection of older prescription drugs annually, but this authority has a restricted scope.
Both drug manufacturers and Trump administration officials agree that European nations aren’t paying their fair share for medications. This month, Commerce Secretary Howard Lutnick specifically criticized Switzerland in a podcast interview, highlighting how major multinational drugmakers based there, such as Roche and Novartis, accrue significant profits from their sales within the U.S. market.
He 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, publicly stated in July his agreement with the president’s sentiment regarding the need to equalize drug prices between the U.S. and other developed nations. He emphasized that research and development expenses “should be shared more fairly across rich countries.”