By Fineline Cube 
Reuters reported that the Trump administration is exploring a policy to tie domestic drug prices to lower international pricing benchmarks from developed countries. This initiative, expected to be advanced through the Centers for Medicare & Medicaid Services (CMS), has raised significant concerns within the pharmaceutical industry.
Policy Background and Mechanism
The proposal, considered a mid-tier priority in efforts to reduce pharmaceutical costs, may adopt a framework similar to the “Most Favored Nation” model proposed in 2020. This model aimed to align Medicare Part B drug prices with the lowest rates among OECD nations. However, a similar CMS rule in 2020 was blocked by federal courts due to procedural violations under the Administrative Procedure Act (APA).
Industry Reaction and Implications
Industry insiders caution that this policy could pose a “potentially existential threat” to the biopharma sector and US biomedical innovation. The Pharmaceutical Research and Manufacturers of America (PhRMA) has intensified lobbying efforts against international reference pricing, arguing it would severely undermine R&D investment. The US biopharma sector currently invests $130 billion annually in R&D, accounting for 22% of the global total.
Market and Pricing Impact
US drug prices average 3.44 times OECD levels, with biologics costing 4.7 times more than in Germany, according to a 2023 RAND Corporation analysis. The America First Policy Institute (AFPI), a Trump-aligned think tank, has proposed embedding international pricing into Medicare negotiation authority under IRA Section 11001, aiming to circumvent previous legal challenges.-Fineline Info & Tech