Trump revives plan to link U.S. drug prices to cheaper foreign rates

USA – The Trump administration is again considering a plan that could shake up the U.S. pharmaceutical industry — linking domestic drug prices to those paid by other wealthy countries.

According to a Reuters report published Tuesday, this controversial proposal has re-emerged as a major concern for drugmakers, who fear it more than even the looming threat of tariffs on imported medicines.

Industry sources say the idea is gaining traction inside the Centers for Medicare and Medicaid Services (CMS), which could roll out a pricing policy based on international benchmarks.

One insider familiar with the talks told Reuters that CMS officials have signaled the policy is under review, describing it as a “mid-level priority” for the administration.

“The administration may not fully understand how damaging this could be to pharmaceutical innovation in the U.S.,” the source warned, adding that it could disrupt the entire healthcare system, not just drug manufacturers.

The renewed focus on price reform comes as drug companies are making major investments to expand manufacturing on U.S. soil.

On Tuesday, Roche announced a US$ 50 billion plan to boost research and production facilities in the U.S. over five years, following similar billion-dollar commitments from Eli Lilly, Johnson & Johnson, and Novartis.

President Donald Trump has made it clear that he expects drug companies to bring production home, threatening steep tariffs on pharmaceutical imports if they don’t.

Commerce Secretary Howard Lutnick recently indicated that such tariffs could be enforced within the next couple of months.

However, some experts note that major investments like Roche’s typically take years to plan, suggesting they may not be solely motivated by tariff threats.

This isn’t Trump’s first attempt at international price matching. During his first term, he introduced a “favored nations” policy that aimed to reduce Medicare payments by matching drug prices in countries like Canada and those in Europe.

That plan was blocked in court in late 2020, but government analysts had projected it could save taxpayers and Medicare recipients more than US$ 85 billion over seven years.

Now, the idea seems to be gaining momentum again. A policy paper from the America First Policy Institute last month suggested that CMS could adopt international price comparisons under its current powers in the Inflation Reduction Act.

The paper argued that CMS could use global pricing data to determine a drug’s “maximum fair price.”

Meanwhile, the pharmaceutical industry is ramping up its lobbying efforts against any form of international reference pricing.

PhRMA, the industry’s major trade group, has reportedly been in talks with lawmakers to oppose the proposal, citing concerns about its potential to stifle drug development and limit patient access.