The U.S. Drug Price Crisis: Sensitivity to Other Countries Despite Trump’s Measurement of Taxes and the President’s Executive Order

President Trump is taking aim at U.S. drug prices with an executive order geared toward forcing drug companies to match the lower prices paid in other developed countries.

During the White House announcement, Dr. Mehmet Oz, who leads the Centers for Medicare and Medicaid Services under Trump, pointed out that even the lower negotiated Medicare prices are higher than what people pay in Europe for the same products. Half the time we are paying three times more than in other countries. It doesn’t make any sense for the system.”

If drugmakers don’t do it voluntarily, the administration is threatening to directly tie drug prices paid by government programs like Medicare to those paid in other countries.

There are multiple parts to the new executive order. It directs the U.S. Trade Representative and Department of Commerce to take action against “unreasonable and discriminatory policies” that lower drug prices abroad, though it’s not clear what authority the White House has in this regard. It also directs Health and Human Services Secretary Robert F. Kennedy Jr. to facilitate direct–to-consumer sales that bypass health insurance at lower prices.

“We’ve been subsidizing other countries throughout the world” by paying higher prices, Trump said at the White House Monday, joined by leaders of federal health agencies.

Patients in the U.S. pay more for drugs than they would in other countries due to the fact that the government sets prices for healthcare. The U.S., by and large, doesn’t set prices, so drug companies have more freedom to see what prices the market here will bear.

In the basement of a Salt Lake City pharmacy lies a wall made of rows of amber-colored plastic pill bottles.

Jolley bought six months’ worth of the most expensive large bottles, hoping to shield his business from the 10% across-the-board tariffs on imported goods that President Trump announced April 2. Now with threats of additional tariffs targeting pharmaceuticals, Jolley worries that costs will soar for the medications that will fill those bottles.

Narrowly focused tariffs might work in some cases, said Marta Wosińska, a senior fellow at the Brookings Institution’s Center on Health Policy. Drug manufacturing plants can cost $1 billion and take three to five years to setup, but building a syringe factory is cheap and American manufacturers abandoned it because China was dumping its products here.

He didn’t think they would return and say “well, here’s your 10% increase because of the 10% tariff”. “Costs are gonna go up and then the sluggish responses from the PBMs — they’re going to lead us to lose more money at a faster rate than we already are.”

Squeezed by insurers and middlemen, independent pharmacists such as Jolley find themselves on the front lines of a tariff storm. Nearly everyone down the line — drugmakers, pharmacies, wholesalers and middlemen — opposes most tariffs.

“Big ships don’t change course overnight,” said Robin Feldman, a UC Law San Francisco professor who writes about prescription drug issues. It will take some time to get manufacturing up and running. To avoid hurt to consumers, the key will be to make sure there is no damage to industry.

“When they hear that, they will leave China,” he said. In the year 2024, the United States imported $213 billion worth of medicines from China and other countries.

Scott Pace, a pharmacist and co-owner of an Arkansas pharmacy, said “The one word that I would say right now is uncertainty.”

Why do U.S. drug makers make more common drugs? A spokeswoman for the anti-Pharmacists campaign against Trump tariffs, and a counterattack to the March 11 letter

He said he put all the top generics on the shelf for 90 days as a starting point. “Those are the diabetes drugs, the blood pressure medicines, the antibiotics — those things that I know folks will be sicker without.”

Pharmacy doesn’t pass along the costs to patients. Their payments are set by health insurers and pharmacy benefit managers largely owned by insurance conglomerates, who act as middlemen between drug manufacturers and purchasers.

He said at an economic conference in Washington that real estate in North Texas was cheaper than real estate in Shenzhen, a Chinese chemical manufacturing center.

“There’s not a magic level of tariffs that magically incentivizes them to come into the U.S.,” he said. It’s not possible to make a billion-dollar investment in a domestic facility if you are going to lose money every time you sell in the US market.

His group has tried to explain these complexities to Trump officials, and hopes word is getting through. Murphy said that the group was not related to makers of brand-name drugs. To speak to the president himself I don’t have the money or time to do that.

The March 11 letter said that the US would incentivize use of more expensive brand name biologics if there was additional tariffs on foreign biosimilars. Biosimilars, which can cost a tenth of the original drug’s price, launch on average three to four years later in the U.S. than in Canada or Europe.

John Barkett, a White House Domestic Policy Council member in the Biden administration, said that Europe’s tendency to set stable contracts with makers of generics lead to lower prices in the US.

Source: Pharmacists stockpile most common drugs on chance of targeted Trump tariffs

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“How do I solve the problem of caring for my community,” he said, “but not being subject to the emotional roller coaster that is dispensing hundreds of prescriptions a day and watching every single one of them be a loss or 12 cents profit?”

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