Both sources, who were not authorized to speak publicly, said they expected the policy to come from the agency that oversees Medicare and Medicaid health programs.
The two sources said any such policy was more concerning to the industry than other government moves under discussion, which include tariffs on imported medicines. The first source said it is the biggest “existential threat to the industry and U.S. biosciences innovation.”
The U.S. pays the most for drugs in the world, often nearly three times that of other developed nations. President Donald Trump has said he wants to close that spread, but has not publicly specified how. In his first term, Trump’s proposed international reference pricing program was blocked by a court.
“I don’t think the administration fully understands the impact that policy could have on innovation in the U.S.,“ said the first source. It will “be disruptive for the entire healthcare market, not just pharmaceuticals.”
The White House, the U.S. Department of Health and Human Services, which oversees Medicare, and PhRMA did not respond to requests for comment.
Drug pricing and other pilots are typically run within the Centers for Medicare and Medicaid Services’ innovation center, known as CMMI, and can extend for years to either Medicare, Medicaid or both.
Former President Joe Biden’s Inflation Reduction Act allows the government to negotiate the price of its costliest drugs. The prices for the first 10 prescription drugs it negotiated were still on average more than double, and in some cases five times, what drugmakers had agreed to in four other high-income countries, Reuters previously reported.
The Trump administration would face an uphill battle in implementing even a limited proposal, experts said.
The Trump administration’s layoff plans for multiple government health agencies included around 300 staff from the Medicare agency of the 10,000 total targeted by Health Secretary Robert F. Kennedy Jr. Another 10,000 have left after taking buyout and early retirement options, HHS has said.
There are thousands of approved drugs in the U.S., some of which are not covered by or have not been launched in different reference nations, said Rena Conti, an associate professor at Boston University.
A 2022 JAMA study of nearly 600 new medicines approved in either the U.S. or Germany found that 92% were available in the U.S., while 80% were available in Germany.
Drugmakers could also respond by re-negotiating contracts with reference countries to increase prices, raising the bar for prices in the U.S. and generating higher revenue abroad, Conti suggested.
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