Trump plans to align US drug prices with international ones

According to people familiar with the matter, the Trump administration is planning a new policy that could trigger a strong backlash from the pharmaceutical industry: aligning US drug prices with the generally lower levels of other developed countries. The goal of this policy is to cut US medical expenses, and this trend has aroused great vigilance among drug manufacturers. This policy may be promoted by relevant agencies responsible for managing Medicare and Medicaid. It is revealed that government health officials have directly expressed this direction and called it one of the key measures of the Trump administration in controlling drug prices.

First of all, compared with previously discussed policies such as imposing tariffs on imported drugs, this "international reference pricing" plan is more worrying for pharmaceutical companies. It is reported that this is the most serious challenge to US biotech innovation. The Pharmaceutical Research and Manufacturers of America lobbied Congress on this issue earlier this year.

For a long time, US drug prices have been the highest in the world, often two to three times that of other countries. Although Trump has repeatedly stated that he wants to narrow this gap, he has not yet detailed how to achieve it. As early as his first term, he proposed a broad international pricing mechanism, but ultimately failed to implement it due to court obstruction. The proposal was estimated to save American taxpayers more than $85 billion in medical expenses over seven years. People familiar with the matter pointed out that if the policy is launched, it is expected to start with a pilot project for federal medical insurance and gradually promote its implementation. Although Trump himself has not publicly supported international reference pricing, the "American Policy Priorities Institute" with close ties to him has proposed this strategy in a recent research report. The research institute believes that in this way, the government can gain greater bargaining power in Medicare's drug price negotiations.

Secondly, the Biden administration previously passed the "Reducing Inflation Act" to give the federal government the power to negotiate prices for some expensive drugs. However, even the top ten drugs included in the negotiations are still much more expensive in the United States than in other high-income countries, and some are even five times higher. Take Bristol-Myers Squibb's anticoagulant Eliquis as an example. The US price is as high as $606, while the same dose is $114 in Sweden and only $20 in Japan. Although the Biden administration plans to reduce the price of Eliquis covered by Medicare to $295, the gap is still obvious.

It is worth noting that although the health care executive order issued by Trump recently did not explicitly mention international reference pricing, some analysts believe that its statement on "improving the value of drugs" may pave the way for this policy. Experts pointed out that even if it is only a small-scale pilot, it will face many difficulties in implementation.

In addition, the Trump administration's previous plan to lay off federal agencies also poses potential resistance to this policy. It is reported that Medicare-related agencies alone will lay off about 300 employees, and the Department of Health and Human Services also plans to cut 10,000 people. Rena Conti, an associate professor at Boston University, pointed out that there are thousands of approved drugs on the US market, and other countries may not fully cover these drugs, and price negotiations often take years. In addition, many countries do not disclose drug prices, and the United States can only estimate them through public data, ignoring possible government discounts. Pharmaceutical companies may push up the price bottom line globally by renegotiating prices with reference countries to ease the revenue pressure brought by US policies.

Overall, the Trump administration is considering aligning US drug prices with international standards in order to solve the high drug price problem that has long plagued the American people and the financial system. Although this policy can theoretically help control medical expenses and improve the efficiency of medical insurance, it faces multiple challenges in implementation, including legal, administrative and international coordination. Strong opposition from the pharmaceutical industry and potential technical difficulties also mean that if this reform is to take shape, it still needs to strike a delicate balance between political will, public support and enforcement capabilities. Regardless of the outcome, this trend will undoubtedly have a profound impact on the US medical market and the global pharmaceutical landscape.