U.S. pharmaceuticals cost at least three times as much as the exact same drugs in other nations. Reuters published a plausible story this morning about the Trump Administration's plans to correct this, but it is based on only two, unnamed sources:
Trump looking at cutting US drug prices to international levels, sources say
By Patrick Wingrove - April 22, 2025Summary
* Government health officials told source they were exploring an international reference pricing policy
* U.S. pays nearly three times more than other developed countries for drugs
* The policy is more concerning to the pharmaceuticals industry than tariffs, sources sayApril 22 (Reuters) - Drugmakers have been warned that the Trump Administration is considering linking U.S. medicine prices to lower amounts paid by other developed countries, according to two company sources who called the option the pharmaceutical industry's top concern.
Both sources, who were not authorized to speak publicly, said they expected the policy to come from the agency that oversees Medicare and Medicaid health programs.
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The first source said he had been told directly by government health officials that they were exploring such a policy, which he described as a mid-level priority for the Trump Administration as it tries to lower drug prices.The two sources said any such policy was more concerning to the industry than other government moves under discussion, which include tariffs on imported medicines. The first source said it is the biggest "existential threat to the industry and U.S. biosciences innovation."
Industry trade group PhRMA earlier this year lobbied Congress on the issue, sometimes referred to as international reference pricing, according to government records.
The U.S. pays the most for drugs in the world, often nearly three times that of other developed nations. President Donald Trump has said he wants to close that spread, but has not publicly specified how. In his first term, Trump's proposed international reference pricing program was blocked by a court.
Trump's wide-ranging proposal five years ago was projected by his administration to save taxpayers more than $85 billion over seven years, cutting into U.S. annual spending of more than $400 billion on drugs.
"I don't think the administration fully understands the impact that policy could have on innovation in the U.S.," said the first source. It will "be disruptive for the entire healthcare market, not just pharmaceuticals."
He said he expected the Medicare agency to launch a pilot of the program, after health officials said they were looking to test some drug pricing proposals.
The White House, the U.S. Department of Health and Human Services, which oversees Medicare, and PhRMA did not respond to requests for comment.
FOCUS ON MEDICARE
Drug pricing and other pilots are typically run within the Centers for Medicare and Medicaid Services' innovation center, known as CMMI, and can extend for years to either Medicare, Medicaid or both.
Trump has not publicly raised the idea of reference pricing since taking office, but conservative think tank the America First Policy Institute has. In a widely circulated paper last month it said the policy could be implemented within Medicare's drug price negotiations.
Former President Joe Biden's Inflation Reduction Act allows the government to negotiate the price of its costliest drugs. The prices for the first 10 prescription drugs it negotiated were still on average more than double, and in some cases five times, what drugmakers had agreed to in four other high-income countries, Reuters previously reported.
Reference pricing was missing from Trump's healthcare executive order last week, but one analyst said by directing the government to obtain better value for medicines covered by Medicare, it may have opened the door to the policy.
The Trump administration would face an uphill battle in implementing even a limited proposal, experts said.
Anna Kaltenboeck, a health economist at Verdant Research, said the Centers for Medicare & Medicaid Services only has so many staff and implementing such a policy may require "a fair amount of manpower that (CMS) is going to struggle to muster."
The Trump administration's layoff plans for multiple government health agencies included around 300 staff from the Medicare agency of the 10,000 total targeted by Health Secretary Robert F. Kennedy Jr. Another 10,000 have left after taking buyout and early retirement options, HHS has said.
Trump’s government would also face challenges in trying to implement the policy more broadly, said Kaltenboeck.
There are thousands of approved drugs in the U.S., some of which are not covered by or have not been launched in different reference nations, said Rena Conti, an associate professor at Boston University.Those countries can sometimes take years to negotiate drug prices, she added.
A 2022 JAMA study of nearly 600 new medicines approved in either the U.S. or Germany found that 92% were available in the U.S., while 80% were available in Germany.
Some countries don't publish what they pay for drugs. Conti said the administration could estimate what they pay based on publicly available data, but without accounting for further discounts those governments negotiated.
Drugmakers could also respond by re-negotiating contracts with reference countries to increase prices, raising the bar for prices in the U.S. and generating higher revenue abroad, Conti suggested.
President Donald Trump plans to sign an executive order next week directing the Executive Branch to pursue “Most Favored Nation” pharmaceutical pricing within the Medicare program:
https://www.politico.com/news/2025/05/07/trump-sweeping-medicare-drug-price-plan-00334167
Trump to pitch sweeping Medicare drug price plan
Trump wanted to advance the ‘most favored nation’ policy in his first term but faced resistance from industry and the courts.By Jake Traylor and Adam Cancryn - May 7, 2025
President Donald Trump plans to revive an effort to dramatically slash drug costs by tying the amount the government pays for some medicines to lower prices abroad, three people familiar with the matter told POLITICO.
Trump early next week is expected to sign an executive order directing aides to pursue the initiative, called “most favored nation,” for a selection of drugs within the Medicare program. The idea would use the administration’s authorities to force prices down.
The proposal has not been finalized and could still change as aides work through the specifics, said the people involved in the plan, who were granted anonymity to describe internal deliberations. Trump has not yet personally approved the plan.
The president on Tuesday teased a “very big announcement” within the next week that one of the people familiar characterized as a reference to the drug pricing proposal. The other two did not know whether it was the big announcement but confirmed the drug price plan was likely to be announced in the next week.
“We’re going to have a very, very big announcement to make — like as big as it gets,” Trump said. “It will be one of the most important announcements that have been made in many years about a certain subject.”
Should Trump go ahead with the order, it would represent a major confrontation between the White House and the deep-pocketed pharmaceutical industry.
Trump announced plans for a similar initiative in 2018, but it failed to gain traction in the face of sharp resistance from the drug industry. He later tried to push the policy through in the final months of his first term. But a judge halted the effort after determining the administration failed to follow the proper processes for implementing it, and the incoming Biden administration opted to rescind the policy.
White House press secretary Karoline Leavitt on Wednesday was coy about the proposal.
“The President will make a big and historic announcement on Monday. Until then, everyone can keep guessing!” she said.
Within the West Wing, Trump has grown increasingly focused in recent weeks on lowering drug prices, urging aides to find policies capable of making a big dent in the cost of medicines, according to two of the people familiar with the matter.
Trump’s poll numbers have suffered in recent weeks since his tariff policies have begun to rattle markets and raise fears of widespread inflation and shortages of consumer goods.
White House officials initially pressed congressional Republicans to draft in their megabill a “most favored nation” provision tying the cost of medicines in Medicaid to the lower prices developed countries pay abroad.
But that bid ran into opposition across the GOP conference and is unlikely to be included in the legislation, said one of the people familiar with the matter.
The White House is instead now expected to try to advance the drug price proposal on its own, using existing authorities to impose its “most favored nation” model.
The effort, if finalized, would likely draw massive opposition from a drug industry that has warned the idea would decimate companies’ ability to develop new drugs. It could also trigger fresh legal challenges.
Trump’s order this go-around will look largely similar to his first, with even less specifics on which direct medicines are targeted, said one of the people familiar.
President Donald Trump will sign the executive order to cut prescription prices to the level paid by other high-income countries Monday morning. We will find out whether Big Pharma is as adept at lawfare as the Democrats:
Trump to sign executive order to cut prices of medicine to match other countries
By Michael Erman and Patrick Wingrove -May 11, 2025WASHINGTON, May 11 (Reuters) - U.S. President Donald Trump said on Sunday he would sign an executive order to cut prescription prices to the level paid by other high-income countries, an amount he put at 30% to 80% less.
In a post on Truth Social, Trump said he would sign the executive order on Monday morning to pursue what is known as "most favored nation" pricing or international reference pricing.
The U.S. pays the most in the world for many prescription drugs, often nearly triple that of other developed nations. Trump has said he wants to close that spread, but has not publicly specified how and did not provide details in his post.
"They will rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!" he said.
"I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World," Trump added.
Drugmakers have been expecting an order that would focus on the Medicare health insurance program, according to four drug industry lobbyists who said they had been briefed by the White House. Reuters previously reported such a policy was under consideration.
The drugmakers expect the order to apply to a universe of drugs beyond those currently subject to negotiation under former President Joe Biden's Inflation Reduction Act.
Because of that law, Medicare has negotiated prices for 10 drugs, with those prices due to be put in place next year. More medicines [another 10!] were set to be negotiated later this year.
"Government price setting in any form is bad for American patients," Alex Schriver, a spokesperson for the top U.S. drug company lobbying group, the Pharmaceutical Research and Manufacturers of America, said in a statement when asked about Trump's planned executive order.
This is not the first time President Trump has tried to tie drug prices to what other countries pay. During Trump's first term, a court blocked a proposed international reference pricing program.
That proposal five years ago was projected by his administration to save taxpayers more than $85 billion over seven years, cutting into U.S. annual spending of more than $400 billion on drugs.
Signed today:
DELIVERING MOST-FAVORED-NATION PRESCRIPTION DRUG
PRICING TO AMERICAN PATIENTSBy the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered:
Section 1. Purpose. The United States has less than five percent of the world’s population and yet funds around three quarters of global pharmaceutical profits. This egregious imbalance is orchestrated through a purposeful scheme in which drug manufacturers deeply discount their products to access foreign markets, and subsidize that decrease through enormously high prices in the United States.
The United States has for too long turned its back on Americans, who unwittingly sponsor both drug manufacturers and other countries.
These entities today rely on price markups on American consumers, generous public subsidies for research and development primarily through the National Institutes of Health, and robust public financing of prescription drug consumption through Federal and State healthcare programs. Drug manufacturers, rather than seeking to equalize evident price discrimination, agree to other countries’ demands for low prices, and simultaneously fight against the ability for public and private payers in the United States to negotiate the best prices for patients. The inflated prices in the United States fuel global innovation while foreign health systems get a free ride.
This abuse of Americans’ generosity, who deserve low-cost pharmaceuticals on the same terms as other developed nations, must end.
Americans will no longer be forced to pay almost three times more for the exact same medicines, often made in the exact same factories.
As the largest purchaser of pharmaceuticals, Americans should get the best deal.
Sec. 2. Policy. Americans should not be forced to subsidize low-cost prescription drugs and biologics in other developed countries, and face overcharges for the same products in the United States. Americans must therefore have access to the most-favored-nation price for these products.
My Administration will take immediate steps to end global freeloading and, should drug manufacturers fail to offer American consumers the most-favored-nation lowest price, my Administration will take additional aggressive action.
Sec. 3. Addressing Foreign Nations Freeloading on American-Financed Innovation. The Secretary of Commerce and the United States Trade Representative shall take all necessary and appropriate action to ensure foreign countries are not engaged in any act, policy, or practice that may be unreasonable or discriminatory or that may impair United States national security and that has the effect of forcing American patients to pay for a disproportionate amount of global pharmaceutical research and development, including by suppressing the price of pharmaceutical products below fair market value in foreign countries.
Sec. 4. Enabling Direct-to-Consumer Sales to American Patients at the Most-Favored-Nation Price. To the extent consistent with law, the Secretary of Health and Human Services (Secretary) shall facilitate direct-to-consumer purchasing programs for pharmaceutical manufacturers that sell their products to American patients at the most-favored-nation price.
Sec. 5. Establishing Most-Favored-Nation Pricing.
(a) Within 30 days of the date of this order, the Secretary shall, in coordination with the Assistant to the President for Domestic Policy, the Administrator for the Centers for Medicare and Medicaid Services, and other relevant executive department and agency (agency) officials, communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.
(b) If, following the action described in subsection (a) of this section, significant progress towards most-favored-nation pricing for American patients is not delivered, to the extent consistent with law:
(i) the Secretary shall propose a rulemaking plan to impose most-favored-nation pricing;
(ii) the Secretary shall consider certification to the Congress that importation under section 804(j) of the Federal Food, Drug, and Cosmetic Act (FDCA) will pose no additional risk to the public’s health and safety and result in a significant reduction in the cost of prescription drugs to the American consumer; and if the Secretary so certifies, then the Commissioner of Food and Drugs shall take action under section 804(j)(2)(B) of the FDCA to describe circumstances under which waivers will be consistently granted to import prescription drugs on a case-by-case basis from developed nations with low-cost prescription drugs;
(iii) following the report issued under section 13 of Executive Order 14273 of April 15, 2025 (Lowering Drug Prices by Once Again Putting Americans First), the Attorney General and the Chairman of the Federal Trade Commission shall, to the extent consistent with law, undertake enforcement action against any anti-competitive practices identified within such report, including through use of sections 1 and 2 of the Sherman Antitrust Act and section 5 of the Federal Trade Commission Act, as appropriate;
(iv) the Secretary of Commerce, and the heads of other relevant agencies as necessary, shall review and consider all necessary action regarding the export of pharmaceutical drugs or precursor material that may be fueling the global price discrimination;
(v) the Commissioner of Food and Drugs shall review and potentially modify or revoke approvals granted for drugs, for those drugs that maybe be unsafe, ineffective, or improperly marketed; and
(vi) the heads of agencies shall take all action available, in coordination with the Assistant to the President for Domestic Policy, to address global freeloading and price discrimination against American patients.Sec. 6. General Provisions.
(a) Nothing in this order shall be construed to impair or otherwise affect:
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii.) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The Department of Health and Human Services shall provide funding for publication of this order in the Federal Register.
DONALD J. TRUMP
THE WHITE HOUSE,
May 12, 2025.
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