Trump Administration May Tie U.S. Drug Prices to Global Rates, Raising Industry Concerns

The Trump administration is reportedly weighing a plan to link U.S. drug prices to those paid in other developed countries—a move that has sparked deep concern within the pharmaceutical industry, according to two industry sources. 

The potential policy, known as international reference pricing, would benchmark the cost of medications in the U.S. against prices in countries where medicines are significantly cheaper. Both sources, who spoke on condition of anonymity, said this is now considered the most pressing concern for drugmakers, more so than other regulatory proposals such as tariffs on imported drugs. 

One source noted that officials overseeing Medicare and Medicaid programs have directly indicated the idea is under serious consideration, describing it as a mid-level priority within the Trump administration’s broader effort to reduce drug costs. 

“This is the biggest existential threat to the industry and to innovation in U.S. biosciences,” the source said, adding that the implications could be far-reaching—not only for pharmaceutical companies but for the entire healthcare ecosystem. 

The U.S. consistently pays more for prescription drugs than any other country, often nearly three times as much as its international peers. Former President Trump had previously proposed a similar international pricing index during his first term, which was expected to save the government over $85 billion across seven years. However, that plan was blocked by a federal court and never implemented. 

Industry lobbying group PhRMA has voiced opposition to such measures, warning that they could stifle research and innovation. Congressional lobbying records show PhRMA has actively pushed back against reference pricing proposals in recent years. 

One source said the policy could be rolled out initially through a pilot program under the Medicare agency, as officials explore various drug pricing reforms. The White House, the Department of Health and Human Services, and PhRMA declined to comment on the matter. 

“I don’t think the administration fully understands how disruptive this could be—not just for pharma, but for the entire healthcare market,” said the source. As the U.S. grapples with the challenge of rising healthcare costs, the debate over drug pricing—and how to rein it in—continues to intensify.