Washington Demands Drug Companies Lower Prices

After President Donald Trump threatened regulatory action in May against pharmaceutical companies if they do not lower prescription drug prices, the US Department of Health and Human Services (HHS) has joined the fray, demanding that they reduce their drug prices to the lowest price offered to other nations with similar economies to the United States.

Reportedly, pricing negotiations are underway, but no commitments have been made as of the final week of June of 2025.

Specifically, HHS has demanded that drugmakers price drugs at the lowest level offered to any country in the Organization for Economic Cooperation and Development (OECD), an organization of 38 nations with high-income economies, that have a gross domestic product (GDP) per capita of at least 60% of U.S. levels.

In a written statement, HHS Secretary Robert F. Kennedy Jr. said, “We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do.”

These actions follow prior orders during the first Trump Administration in 2020, when they proposed a regulation that would have set Medicare payment rates for certain drugs based on international pricing data. The countries included in that earlier model were Austria, Canada, France, Japan, South Korea and the United Kingdom, among others.

However, the regulation was never finalized.

The new list of countries to compare drug price data may be different for this proposal, as the economic data may have changed in the past five years. HHS did not answer questions about which countries it would include for its new pricing model.

In 2022, an HHS analysis of drug prices discovered that American prices for brand-name drugs are an eye-popping 445% above pricing in France, but the analysis did not account for individual discounts that drugmakers sometimes offer as an incentive to some lower income U.S. buyers.

However, Wall Street and the pharmaceutical industry are united in fighting back against price controls.

David Risinger, an analyst at Leerink Partners, a healthcare investment bank, told Bloomberg News that they found the Administration’s demands to be “extreme, and we do not think that the industry can deliver what is stated.”

 He added that “In our view, biopharma industry executives need to further educate the Trump Administration about highly problematic aspects of this pricing expectation.”  As an investment bank focused on the healthcare industry, Leerink is closely tied to the pharmaceutical industry.

Pfizer CEO and chairman of the industry lobby group PhRMA Albert Bourla said at Goldman Sachs’ Global Healthcare Conference that Pfizer and other drug companies have met with the Trump Administration, but have not reached any agreements yet. He described the meetings with the Administration as “cordial,” but noted that “[the Administration] were not digging into the substance” of the issue.

Legal experts have said that it is unclear which mechanism the government would use to lower drug prices, and that the policy will be difficult to implement.

At the industry investors conference, Bourla warned that if the US tries to implement price controls, Pfizer might consider making drugs unavailable for government reimbursement in some countries if they do not increase drug prices in turn.