The Trump administration is reportedly considering a new regulation that would compel pharmaceutical companies to lower drug prices in the United States to align with the more affordable rates found in other affluent countries. This information comes from an official federal website notice.
The notice, which mysteriously appeared, was then removed for several hours on Thursday, only to be republished later. It mentions a “proposed rule” and a “global benchmark for efficient drug pricing (GLOBE) model” under the purview of the Department of Health and Human Services. The exact details of this proposal, and the reason for its temporary disappearance, remain unclear.
When questioned, Andrew Nixon, a spokesperson for the health department, declined to comment on what he termed “potential future regulations.” The news outlet Reuters had previously reported on this notice earlier on Thursday.
President Trump has consistently advocated for a system where American consumers pay drug prices comparable to the lowest rates in other developed nations. During his initial term, he frequently discussed this approach. In 2020, his Medicare agency even initiated a pilot program to test this concept for a select group of drugs, though this policy was later halted by legal challenges and eventually cancelled by the Biden administration.
Should the current administration proceed with such a drug pricing regulation, it will almost certainly trigger extensive legal battles with pharmaceutical companies. These companies have historically and vehemently opposed any proposals that threaten to significantly reduce their substantial profits.
Alex Schriver, a spokesperson for the trade group PhRMA, stated that “Importing foreign price controls would undermine American leadership, hurting patients and workers.” He suggested that a more equitable solution would be to “get foreign countries to pay their fair share for innovative medicines,” rather than imposing controls on the U.S. market.
Last July, Mr. Trump issued a deadline of September 29 for drug manufacturers to voluntarily decrease their prices, echoing a request made in an executive order from May. This order explicitly warned that if voluntary reductions were insufficient, his administration might “propose a rule-making plan to impose most-favored-nation pricing.” This term implies a policy designed to synchronize U.S. drug prices with those in peer countries.
During a press conference held on Monday, which centered on Tylenol and autism, Mr. Trump highlighted his plans for drug pricing, promising massive cuts. He asserted, “We subsidize the rest of the world. We’re not doing that anymore.”
In his first term, Mr. Trump’s earlier attempt to link U.S. drug prices to international rates aimed to peg Medicare’s payments for specific drugs to the lowest prices in a collection of similar nations. However, this initiative only covered a limited range of drugs administered directly by doctors, such as those for chemotherapy or rheumatoid arthritis. The policy faced court injunctions due to procedural errors, meaning its legality was never definitively ruled upon.
This previous endeavor leveraged a special authority granted to Medicare and Medicaid under Obamacare, allowing for the testing of innovative programs to enhance healthcare quality and reduce costs. While the “innovation center” is designed for developing and evaluating demonstration projects, the program was implemented as a nationwide mandate, making it vulnerable to legal challenges that argued it wasn’t a genuine experiment.
Recently, several drug companies have announced measures seemingly intended to placate Mr. Trump. However, none have committed to lowering the actual prices paid by U.S. government programs, employers, or private insurers.
For example, Eli Lilly revealed its intention to increase the “sticker price” of Mounjaro, its popular weight-loss medication, in Britain.
Similarly, Bristol Myers Squibb announced this week that it plans to launch a new schizophrenia treatment in Britain with the same list price as in the U.S. The company also recently adopted one of Mr. Trump’s key demands: offering a widely used blood thinner, Eliquis, directly to patients without involving insurance.
An imposed mandate to align U.S. drug prices with European levels represents arguably the most significant threat to the pharmaceutical industry’s business model under the Trump administration. Earlier this month, Trump officials indicated plans for regulations that could ban drug advertisements from television. Furthermore, the industry is still anticipating the possibility of Mr. Trump’s long-promised tariffs on imported medications.
During his current term, Mr. Trump has been less direct about advocating for explicit drug price controls compared to his first term. Instead, his focus has been on issuing executive orders and delivering speeches that urge pharmaceutical companies to voluntarily adjust their prices in both the United States and abroad to achieve greater price uniformity.
In July letters to drug manufacturers, he insisted on lower prices for “every single” patient covered by Medicaid, the federal health 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 on the market, excluding those for Medicaid beneficiaries, might be exempted.
On average, the prices of brand-name drugs 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 pillars of the pharmaceutical industry’s financial strategy. Mr. Trump and his allies have consistently characterized this pricing disparity as unfair.
In contrast, governments in other wealthy countries, particularly in Europe, engage in rigorous negotiations with drug manufacturers over prices and are prepared to decline new drugs if the costs are deemed too high.
In the United States, there is a considerably lower inclination to withhold new drugs from patients. Here, drug prices typically begin very high and only decrease significantly when multiple patent-protected products start competing for the same patient population.
Legislation enacted during the Biden administration permits Medicare to negotiate the prices of a limited selection of older prescription drugs annually, but this authority is restricted in its overall impact.
Both drugmakers and Trump administration officials acknowledge that European countries often pay too little for medicines. In a podcast interview this month, Commerce Secretary Howard Lutnick specifically criticized Switzerland, home to major multinational pharmaceutical companies like Roche and Novartis, which derive substantial profits from their sales in 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.”
AstraZeneca’s chief executive, Pascal Soriot, informed 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 stated that the costs associated with research and development “should be shared more fairly across rich countries.”