Drug price and international level

Plan to align the United States is revived by the Trump administration. Drug Prices with International Levels

Former President Donald Trump, who is once again a key figure on the political stag, is reviving an initiative aimed at slashing drug prices by comparing them to those in other developed nations in a bold move to overhaul the cost of prescription medications in the United States. According to people familiar with the situation, Trump's team is looking into expanding aggressively international reference pricing, a strategy that has the potential to fundamentally alter how pharmaceuticals are priced and sold in the United States. The Proposal: International Reference Pricing

International reference pricing—a system in which U.S. drug prices, particularly those covered by Medicare—would be linked to the prices paid for the same drugs in countries like Canada, Germany, France, and the UK—is at the heart of Trump's plan to reform drug prices. These nations often pay significantly less for the exact same medications due to strict government negotiation or price-setting powers.

The Centers for Medicare and Medicaid Services (CMS) would put the proposal under consideration into action, particularly through its Center for Medicare and Medicaid Innovation (CMMI). Sources suggest that the plan could begin as a demonstration project focusing on the most expensive drugs administered in clinical settings under Medicare Part B, but that it could eventually be implemented in a more comprehensive manner. This idea is not entirely novel. In 2018, Trump unveiled a model that was very similar to the "Most Favored Nation" concept and sought to bring American prices in line with those of other wealthy nations. That plan was met with industry resistance and legal pushback, eventually being blocked in court before it could take effect. According to insiders, the new version is being meticulously reorganized to avoid previous legal pitfalls and increase the administration's authority under federal law. Industry Response and Challenges

The pharmaceutical industry has vigorously responded, which is not surprising. The pharmaceutical industry contends that tying prices to those of other nations could have unintended consequences, such as less funding for research and development, job losses, and delays in the introduction of new treatments. The industry’s chief trade group, PhRMA (Pharmaceutical Research and Manufacturers of America), has already criticized the renewed focus on international pricing. In a recent statement, the organization warned that such a system would “import foreign price controls” and ultimately harm patients by limiting access to innovative treatments.

The viability of implementing reference pricing is also questioned by critics. In addition to differences in negotiation power, regulatory frameworks, currencies, population health requirements, and confidential rebates, drug prices vary widely across nations. According to industry insiders, taking these prices at face value could result in inaccurate cost comparisons. The administrative and technical issues with CMS itself add to the complexity of the situation. Some insiders say that ongoing Medicare negotiations authorized by the Inflation Reduction Act, which capped out-of-pocket insulin costs and gave Medicare limited negotiation powers on a short list of drugs, are already putting a strain on the agency. The agency's resources may be overwhelmed if an intricate international pricing model is added on top of that. Impact and Savings Potential Despite the challenges, the proposed policy could have a profound impact on the U.S. healthcare landscape. Prescription drug costs in the United States typically exceed those in other developed nations by two to three times. Drug prices in the United States were nearly 256% higher than those in 32 countries used as a comparison in a 2022 RAND Corporation study. If international reference pricing were implemented as proposed, the U.S. government could save tens of billions of dollars over the next decade. The Trump administration previously estimated that its “Most Favored Nation” model could have saved Medicare approximately $85 billion over seven years.

Patients would also benefit. Lower Medicare drug prices would likely reduce out-of-pocket costs for seniors and could put pressure on private insurers to follow suit. For many Americans living on fixed incomes, this could mean the difference between affording life-saving medications or going without.

Some economists, however, warn that potential savings might be offset by side effects. If drugmakers decide to increase prices in countries currently used as benchmarks—like Germany or France—to avoid lowering U.S. prices, the whole model could unravel or lead to a global pricing arms race.

Broader Context and Future Outlook

Trump's renewed interest in drug pricing reform is part of a larger effort by politicians from all political parties to reduce healthcare costs. Polls consistently show that high prescription drug costs are one of the top concerns among voters. This issue appears to be serving as a rallying point for Trump's 2024 campaign and beyond, given his reputation for populist rhetoric. His executive order signed in April 2025 also signals a willingness to tackle drug prices through a variety of avenues. The order promises transparency regarding pharmaceutical pricing contracts and supports low-cost insulin distribution through federally qualified health centers, two issues that have previously received support from both parties. Political analysts say that Trump’s willingness to revisit drug pricing policy reflects a pragmatic approach to an issue that resonates deeply with middle-class voters. “This isn’t just politics—it’s policy with teeth,” said Dr. Sheila Morrison, a Georgetown University professor of health policy. "It could be one of the most consequential changes to drug pricing in the history of the United States if he pulls it off this time." It remains to be seen whether this version of international reference pricing will pass regulatory, political, and legal scrutiny. But what is clear is that the battle over drug prices is far from over—and both parties are likely to continue using the issue as a cornerstone of their platforms.

As Americans brace for the upcoming election cycle, proposals like these will likely dominate health policy discussions. Patients, providers, insurers, and pharmaceutical companies alike will be watching closely to see how this high-stakes policy unfolds in the months ahead.