How Will U.S. Drug Price Intervention Impact Global Drug Innovation? (AI Translation)

【周刊提前读】特朗普政府干预药价 如何影响全球医药创新？

Summary:

In May 2024, former U.S. President Donald Trump announced plans to drastically lower American prescription drug prices, aiming to match those in other developed countries through the implementation of a “Most-Favored-Nation Price” (MFN) policy. Trump claimed this could cut drug prices by 30–80%, a move intended to address long-standing criticisms that U.S. patients pay much higher prices than patients elsewhere—for example, $1,300 for semaglutide in New York versus $88 in London [para. 1]. Despite comprising less than 5% of the world’s population, U.S. pharmaceutical spending accounts for about 75% of global industry profits [para. 2]. Trump’s executive order directs the Department of Health and Human Services (HHS) to implement the MFN pricing mechanism within 30 days—potentially including the importation of cheaper drugs from other countries if negotiations fail [3–4]. The MFN policy would set U.S. drug reimbursement at the lowest price available in any OECD country with a similar GDP, adjusted for sales volume and purchasing power [para. 5].

The United States leads globally in drug development, with the highest number of clinical trials and approvals of new drugs [para. 6]. However, U.S. prices for branded drugs are 4.22 times higher than in other OECD nations. Only 7% of prescriptions are for branded drugs, but they account for 87% of spending [para. 7]. Prices of innovative drugs in the U.S. continue to rise annually, outpacing inflation—increases of 50% or more were observed in nearly 80% of top-selling drugs from 2012–2017 [para. 8]. Commercial insurance is the main healthcare payer (30% of spending), followed by Medicare (21%) and Medicaid (18%), weakening government bargaining power [para. 9]. Pharmacy benefit managers (PBMs) control 80% of the prescription drug market, profiting from rebates between list and actual prices, and are believed to contribute to rising drug costs [10–11].

Prior to Trump’s new initiative, President Biden’s Inflation Reduction Act (IRA) in 2022 authorized Medicare price negotiations with drugmakers. The first round in August 2024 resulted in average price cuts of 63% for ten high-expenditure drugs, but U.S. prices remained on average 78% higher than in 11 comparable countries and the impact on overall spending was limited, as mechanisms like rebates kept net costs stable [12–16].

American drug prices are partly due to a highly market-driven system, the absence of direct government negotiation power in Medicare, and rules that allow pharmaceutical companies to set their own payout rates [26–30]. PBMs’ lack of transparency and market dominance has led to legislative and regulatory actions aimed at increasing disclosure and accountability [35–38].

While price reform has gained bipartisan support, implementation remains contentious. Courts have blocked earlier Trump executive orders, and industry groups have sued to stop government-negotiated price cuts, arguing they threaten bio-innovation and infringe on constitutional rights [69–70]. Trump’s MFN executive order is seen as a bold move but lacks implementation details on which drugs are affected and how prices will be calculated. The market has responded with caution, with pharmaceutical stocks largely stable and observers debating whether the order is substantive policy or election rhetoric [84–89].

Lowering U.S. drug prices could affect global pharmaceutical innovation and U.S.-China industry dynamics. Many Chinese firms rely on U.S. market sales for their valuations and overseas expansion; for instance, BeiGene’s Brukinsa earned over 70% of its Q1 2025 sales from the U.S. [para. 101]. If the U.S. pushes prices down, Chinese companies may see acquisition opportunities, especially as multinational drugmakers look to license or source lower-cost drugs (“Me-betters”) from China [para. 107]. However, the effect on China’s contract manufacturing exports to the U.S. is expected to be modest for now due to the small share of manufacturing costs in final drug prices [para. 114].

Overall, persistent U.S. efforts to control drug prices reflect rising budget constraints and changing political priorities. While the current measures’ specifics and long-term impacts remain uncertain, they are likely to reshape both the domestic and global pharmaceutical landscape [para. 123].