The Trump administration has been talking to drugmakers about ways to raise prices of medicines in Europe and elsewhere in order to cut drug costs in the United States, according to a White House official and three pharmaceutical industry sources.
U.S. officials told drug companies it would support their international negotiations with governments if they adopt “most favored nation” pricing under which U.S. drug costs match the lower rates offered to other wealthy countries, the White House official said.
The U.S. is currently negotiating bilateral trade deals and setting tariff rates on the sector.
The Trump administration has asked some companies for ideas on raising prices abroad, two of the sources said, describing multiple meetings over several months aimed at lowering U.S. prices without triggering cuts to research and development spending drugmakers insist would result.
The White House official called the effort collaborative, saying both sides were seeking advice from each other.
Eli Lilly CEO David Ricks, asked on an investor call on Thursday about the administration’s efforts, said long-term parity between U.S. and European drug pricing was desirable and expressed optimism the White House could help drive that change.
“The question is really how? As you know, the European governments are not signing up to pay more for drugs. We need trade tools to rebalance that equation and have been very clear on that advocacy with both U.S. and European governments,” he said.
The U.S. pays more for prescription drugs than any other country, often nearly three times as much as other developed nations. President Donald Trump has repeatedly said he wants to narrow this gap to stop Americans from being “ripped off.”
The previously unreported discussions reflect the challenges Trump faces to achieve that goal, and are the backdrop to the letters he sent last week to CEOs of 17 major drugmakers, urging them to cut U.S. prices to match those paid overseas.
Unlike in the U.S., where market forces determine drug prices, European governments typically negotiate directly with companies to set prices for their national healthcare systems.
Anna Kaltenboeck, a health economist at Verdant Research, said European nations have leverage to drive pricing and are sometimes willing to walk away from purchasing medicines they deem too expensive.
Drugmakers generate most of their sales in the U.S. The Pharmaceutical Research and Manufacturers of America – the industry’s main lobby group – has always argued that cutting U.S. prices would stifle innovation by lowering R&D spending. PhRMA declined to comment on the private meetings.
Lilly’s CEO said the U.S. healthcare system is in need of urgent reform, and if the White House followed through on its plans for a most-favored-nation policy, they risked combining Europe’s lower pharmaceutical productivity with America’s high out-of-pocket costs.
Kaltenboeck said past studies had shown that drugmakers made enough money in the U.S. to more than fund their entire global R&D spends.
“Prices can come down in the United States without being increased in other countries, and we can still get innovation,” she said.
