Donald Trump news: President may cut US drug prices to match other countries amid tariff war

Drug makers have been warned that US President Donald Trump’s administration is considering linking United States 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 authorised to speak publicly, said they expected the policy to come from the US agency that oversees Medicare and Medicaid health programs.

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 Trump’s 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 US 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 US pays the most for drugs in the world, often nearly three times that of other developed countries.

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 $US85 billion ($A133 billion) over seven years, cutting into US annual spending of more than $US400 billion on drugs.

“I don’t think the administration fully understands the impact that policy could have on innovation in the US,” 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 US Department of Health and Human Services, which oversees Medicare, and PhRMA did not respond to requests for comment.

Drug pricing and other pilots are typically run within the Centers for Medicare and Medicaid Services’ innovation centre, known as CMMI, and can extend for years to either Medicare, Medicaid or both.

Former president Joe Biden’s Inflation Reduction Act allows the US 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 drug makers had agreed to in four other high-income countries, Reuters previously reported.

Top-selling blood thinner Eliquis from Bristol Myers Squibb carries a US list price of $US606 for a month’s supply.

Biden’s government negotiated that down to $US295 for Medicare, which will apply from 2026, but the drug costs $US114 in Sweden and just $US20 in Japan.

There are thousands of approved drugs in the US, some of which are not covered by or have not been launched in different reference countries, 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 US or Germany concluded that 92 per cent were available in the US while 80 per cent were available in Germany.

Some countries do not 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.

Drug makers could also respond by re-negotiating contracts with reference countries to increase prices, raising the bar for prices in the US and generating higher revenue abroad, Conti suggested.