Pharmaceutical industry criticizes drug pricing plan Trump says he’ll sign

U.S. President Donald Trump has signed a new executive order that he says will make drug prices go down in the United States, and up elsewhere in the world – including possibly Canada.

The U.S. has by far the highest drug prices in the world, with average list prices about three times that of the next most-expensive countries.

Mr. Trump has vowed to made medication more affordable and has signed multiple orders he says will lead to lower prices, including one that sought to make it easier to import drugs from Canada, while also threatening tariffs if drugmakers don’t move more production to the U.S.

On Monday, his latest order took the international price differential head-on by accusing other countries of “freeloading” on U.S. drug spending. Among the measures is a direction to the U.S. Trade Representative and Secretary of Commerce to investigate whether other countries were engaged in practices that were “suppressing the price of pharmaceutical products below fair market value.”

It also instructed officials to communicate price targets to pharmaceutical companies and “take other aggressive measures” if prices weren’t lowered.

Mr. Trump told reporters in the Oval Office that other countries were “extorting” drug manufacturers by threatening to not list their products unless they were offered “low-dollar” prices.

“We’re going to tell those countries, like those represented by the European Union, that that game is up. Sorry,” he said.

The U.S. is unusual among developed countries in not having some form of price controls on pharmaceuticals.

For example, Canada has a federal regulator – the Patented Medicine Prices Review Board – that can intervene when a drug is brought to market with an “excessive” price, as determined by a comparison with a group of other countries that does not include the U.S.

Doug Clark, the former long-time executive director of the PMPRB, said the U.S. is playing catch-up by starting to benchmark prices against other countries. “It’s something every other country does,” he said.

He said one of former president Joe Biden’s signature achievements was directing Medicare to negotiate lower prices on some products with drugmakers, the first time the U.S. government had used negotiation as a tool.

Canada’s public insurance plans also seek to control costs by having a single body – the pan-Canadian Pharmaceutical Alliance – represent all federal and provincial plans in negotiations with drug manufacturers when a new product is brought to Canada. The pCPA says it saves plans a total of $4.6-billion each year in drug spending through these deals.

Mauro Chies, chief executive officer of the pCPA, said he expects pharmaceutical companies to honour the pricing terms on existing agreements. But if the policies in the executive order go through, drugmakers may seek higher prices when bringing new drugs to market.

“If future brand-name drugs become more costly, should there be efforts by some drug companies to offset losses, it will strain our already stretched healthcare system,” he said in a statement.

He said he did not expect the prices of generic drugs – which make up about 70 per cent of prescriptions in Canada – to be affected as those medications are already priced very low in the U.S.

Canada spent an estimated $372-billion on health care in 2024, of which 13.7 per cent was spent on drugs, according to the Canadian Institute for Health Information.

A dramatic drop in how much the U.S. spends on drugs – in the order of how much Mr. Trump has said he would like to see – could be devastating to the pharmaceutical industry, said Carl Hansen, CEO of Canada-based biotech company AbCellera Biologics Inc.

“If this order was to result in a 30- to 80-per-cent reduction in the U.S. side of sales, the industry is over,” Dr. Hansen said. “Unless other countries were to pick up the slack.”

He said while prices for new drugs can seem high, they need to be to account for the time and expense involved in bringing a new life-changing product to market, as well as the many drugs that fail clinical trials.

“The only way this industry works is if, when there are winners, they are rewarded appropriately to account for all the failures,” he said.

The order also said the administration will develop a mechanism for patients to order drugs directly from manufacturers, “bypassing middlemen.”

Industry middlemen, such as pharmacy benefit managers (PBMs), have drawn heat from state and federal lawmakers for their roles in pharmaceutical pricing. The U.S. Federal Trade Commission sued a group of PBMs last year for allegedly inflating drug costs so they could take large kickbacks. For example, the FTC alleges those companies inflated the price of an insulin drug by 1,200 per cent.

Mr. Clark said this measure was novel and could be meaningful. “The implementation of direct-to-consumer purchasing programs for prescription drugs has never been proposed or tried before and does have the potential to reduce prescription drug prices by eliminating intermediary costs,” he said.

With a report from Sean Silcoff