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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe pharmaceutical industry estimates President Donald Trump’s new drug pricing proposal could cost drug companies as much as $1 trillion over a decade, its largest trade group is telling members of Congress.
The idea, first floated last week by the White House as a way to help pay for the president’s tax cut plan, blindsided the pharmaceutical industry and has prompted a furious lobbying campaign.
It’s drawn the industry off the sidelines, with several senior executives preparing to barnstorm Capitol Hill this week, according to nearly a dozen industry lobbyists and consultants who were not authorized to speak publicly about their efforts.
Specifically, the White House asked House Republicans to tie prices for medicines in the Medicaid program to lower prices foreign countries pay, a twist that would cost drugmakers billions of dollars in lost revenue. Trump had explored versions of the proposal before, but its potential application to the program for low-income and disabled people came as a surprise.
The brand-drug lobby PhRMA, which includes major pharmaceutical companies such as Indianapolis-based Eli Lilly and Co., held an emergency call with its board members on Sunday to discuss its opposition strategy, some of the lobbyists said.
The pressure will only ramp up this week as industry executives at some of the world’s largest pharmaceutical companies converge on Washington for a previously scheduled in-person board meeting.
Pharmaceutical executives have largely tread lightly during Trump’s second term as he publicly weighed slapping the industry with tariffs, appointed vaccine skeptic Robert F. Kennedy Jr. to lead the Department of Health and Human Services and empowered the world’s richest man Elon Musk to cut staff at agencies that regulate drugmakers. The so-called “international reference pricing” policy will test the industry’s ability to influence Republicans on Capitol Hill and in the White House.
“Government price setting in any form is bad for American patients. Imposing foreign reference pricing in Medicaid does not save money for patients and could actually cost them more,” PhRMA spokesperson Alex Schriver said in a written statement. Most patient costs for drugs in Medicaid are low, fixed-dollar amounts.
Chief executives of pharmaceutical companies are making calls on Capitol Hill and requesting in-person meetings, these lobbyists and consultants said. One Republican congressional aide who was not authorized to speak publicly on the issue said they heard from seven pharmaceutical companies, consultants and industry groups over the span of day and a half.
Medicaid drug prices are tied to another drug discount program for hospitals, prompting downstream effects. Meanwhile, a spokesperson for the biotechnology lobby BIO said the international drug pricing plan would particularly devastate innovative small- and mid-size biotech companies.
Pharmaceutical companies sold more than $60 billion in drugs through the hospital discount program in 2023, which was a more than 20% increase from the prior year.
Some House Republicans—including Brett Guthrie, the chair of the panel in charge of finding Medicaid cuts— have previously opposed international reference pricing. Guthrie’s concerns with the policy have not changed, a person familiar with the chairman’s thinking said on Tuesday.
Guthrie plans to meet with other Republicans on his committee early Wednesday to make final decisions on the Medicaid changes and other proposals, a committee member said.
There is no formal bill that could provide a basis to estimate exactly how much such a policy could save the federal government. Those savings—likely much smaller than the $1 trillion overall hit to the industry that PhRMA estimates—are important to Republican lawmakers who are scrambling to find a way to fund tax cuts.
Joe Grogan, a former White House domestic policy council chief during Trump’s first term and now a consultant for health care companies, said Trump’s insistence on lowering drug prices and on-shoring drug manufacturing should come as no surprise given his actions during his first term and during the campaign.
“It’s baffling to me that some in industry think he wasn’t serious. He couldn’t have been more clear,” Grogan said.
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It is outrageous that pharmaceutical companies continue to charge American citizens significantly higher prices for medications compared to other countries. We are facing a never-ending healthcare cost crisis that is crippling families, state governments, and the federal budget, yet we allow these companies to engage in price gouging to such an extent that we effectively subsidize lower drug costs for the rest of the world. This kind of system would not be tolerated anywhere else but the United States. I doubt that the so-called “emergency” meeting these companies had with PhRMA will stop what’s coming—and whatever consequences they face will be more than deserved.
Well, if you don’t want new lifesaving drugs, sure. Cut off the pharma profits that fund R&D.
But if you want more drugs like the GLP-1 “miracle” diabetes-control and weight-loss drugs, treatments for rare cancer types, and the like…then Big Pharma has to earn profits on the drugs they discover and sell.
Eventually, everyday maintenance drugs go off patent and become cheap. The generic statin drug I take is less than two cents a day. A key blood-pressure drug is about $10/month. A small price to pay to overcome inherited conditions.
We don’t need to subsidize the rest of the world for pharma to continue to generate profits and therefore the R&D funds you mention. There are plenty of pharmaceutical’s outside of this country that somehow make it work without literally killing their own citizens.
And “small price to pay”? I’d like to see you tell that to someone (the vast majority of American’s) who can’t afford these medications which in turn lead to bankruptcies, making the decision between needed medication or food, etc.
Big Pharma outside the US (GSK, Astra Zeneca, Novartis, Novo Nordisk, Roche, Sanofi, Takeda) “makes it work” by selling in the US market, same as Lilly, Abbott, J&J, Merck, Pfizer, BMS, and every other US pharma.
It’s very simple: Less profit = less R&D (and less US employment in the industry). Period. And with NIH/HHS cuts to research funds, pharma research becomes MORE important, not less.
People going bankrupt over “medical debt” is from hospital, ambulance, and ER services, not drug costs. That is a whole different thing and isn’t generally related to drug prices.
Chris – how’s that going for insulin?
Frankie, ever hear about $35 insulin from Lilly and Novo?
I think there could be a nice middle ground that they could meet at. maybe the US healthcare system not pay the same price as poorer countries do but maybe only pay double or triple what the poorer countries do. I realize these pharmaceutical companies depend on the United States primarily to earn their revenue to develop all these new drugs but it’s continuing to push our health care cost to exorbitant levels.
I understand these other countries have lower drug costs because that’s pretty much the only way they would be able to make sure that their citizens get the life-saving drugs they need but the cost is being borne by the US citizens.
When it comes to our healthcare, obviously Shareholder Value matters more than anything else. Right?
Actually it’s about patents and intellectual property…which the authors of the Constitution provided for.
Article 1 Section 8 gives Congress the responsibility “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”.
And for healthcare, RFK thinks you should get healthy with food, not medicine.
LOL. “Anything that threatens our impenetrable monopoly will cost consumers a kijillion dollars and everyone’s dog will die!” says stakeholders of the monopoly.
Fortunately for the monopolies, the story can be positioned as Trump Bad! So Nate and the “journalists” are here to carry the water
Chuck, patents are limited monopolies granted to inventors (and recognized by the Founders as essential to the Union).
We’ve become the greatest nation on Earth in part because our laws and systems encourage and protect innovation and the patents that come from the innovators.
You know, that whole MAGA thing fails if you cut the legs out from under it.