President Donald Trump sent letters to 17 of the world’s largest pharmaceutical companies at the end of July. He demanded that they voluntarily lower U.S. prices for some of their drugs to match what they charge affluent foreign nations.
“If you refuse to step up, we will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices,” he wrote, requesting a response by September 29.
The time has come for the companies to draw up to the table.
Eli Lilly appears to have publicly responded, pledging to raise prices in Europe to lower what they charge in the U.S. And Bristol Myers Squibb said it plans to charge the same list price for its new schizophrenia treatment in the United Kingdom as in the U.S.
What happens next — whether the drugmakers make meaningful voluntary changes or the Trump administration follows through with the regulatory stick — will test the effectiveness of a tactic Trump has been using to force businesses to act.
The Trump administration has been relying heavily on drugmakers, food producers and insurers to take steps on their own that officials say will improve public health and lower costs.
Companies, in return, have made a flurry of public commitments to stave off government regulatory action, ranging from replacing petroleum-based synthetic dyes in certain foods, to pledging to reduce medical services subject to prior authorizations, and offering direct-to-consumer pricing for popular medicines.
But former government officials and public health experts warn that it will be difficult to achieve those goals and others without mandatory regulations. Profit-seeking companies, they warn, will make commitments that appear to acquiesce without harming their bottom lines.
Former top Food and Drug Administration tobacco regulator Mitch Zeller acknowledged securing voluntary industry commitments is a faster and less costly process — but he argued an overreliance on dialogue risks sidelining the core functions of public health agencies.
“FDA’s job, when the evidence is there, is to create regulatory policy that has the force of law,” said Zeller, who headed the Center for Tobacco Products from 2013 to 2022. “I wish that consideration of enforceable regulatory policy was a higher priority for this administration, because that’s why we have an FDA.”
While the Trump administration — led by a president who often employs the force of his personality — appears to rely on voluntary corporate action more than its predecessors, the tactic is not new.
Democratic administrations have also leaned on private industries to make voluntary commitments in the past. During the Covid-19 pandemic, the Biden administration asked social media companies to take down alleged misinformation about Covid-19. And during the Obama administration, officials pressed food manufacturers to make voluntary changes to package-front labels to include information on fat content as well as sodium and calorie levels.
That campaign, spearheaded by then-first lady Michelle Obama, aimed to combat childhood obesity levels. Ultimately, the FDA moved forward with a proposed regulation years later to require front-of-package nutrition labels in January, shortly before former President Joe Biden left office.
As the clock ticks down, there are signs the Trump administration may have regulatory efforts ready to deploy if drugmakers don’t meet Trump’s demands.
On Thursday, the White House began reviewing a proposed regulation from the Centers for Medicare and Medicaid Services that could potentially force drugmakers to offer their drugs at a “global benchmark” price.
While the details of the model are not yet public, Trump tried to pursue a similar regulation during his first term that sought to deploy a most-favored nation regulation for a subset of high-cost Medicare Part B drugs. The previous effort was quickly struck down in courts on procedural grounds — but the Trump administration appears to be readying a second attempt using a more deliberative process.
Trump also is readying a punishing duty on drugmakers that don’t comply with another one of his demands — bringing manufacturing back to the U.S. He announced that the U.S. will place a 100 percent tariff on branded or patented drugs starting on Oct. 1 — but he said there will be a carveout for drugmakers that are building a manufacturing plant in America.
The administration is first pressuring industry to take discretionary steps.
In a July op-ed published in The Wall Street Journal, FDA Commissioner Marty Makary and Centers for Medicare and Medicaid Services Administrator Mehmet Oz argued that seeking voluntary commitments from companies will achieve faster results than pursuing what they described as “blunt-force regulation.”
“Working with industry is the best place to start,” Makary and Oz wrote, given that traditional regulations would take years to implement and may stall out. “And we believe in industry to do the right thing when called upon.”
In his July letters, Trump told the drugmaker executives to tie their products’ prices to those in other developed countries — a policy known as most-favored nations pricing — or else.
“Moving forward, the only thing I will accept from drug manufacturers is a commitment that provides American families immediate relief from the vastly inflated drug prices and an end to the free ride of American innovation by European and other developed nations,” Trump wrote.
But drugmakers could find workarounds, say critics of the tactic.
Stacie Dusetzina, a drug pricing expert and professor at Vanderbilt University Medical Center, said drugmakers could charge higher list prices in other countries and simply provide a rebate or discount — meaning it could appear to look like a success while not changing much.
“It’s really just a game of changing the sticker price that we can see, but not actually changing the net price that those other countries pay,” Dusetzina said. “So from a political strategy, that makes a lot of sense for the company.”
Juliette Cubanski, deputy director of KFF’s Medicare policy program, also said that the recent concessions by drugmakers to cut the direct-to-consumer cash price of certain medicines such as Eliquis, a blood thinner made by Bristol Myers Squibb, will do little for the vast majority of patients.
“The example of Eliquis shows that for the most part, the only patients who stand to benefit from direct-to-consumer sales are people who are uninsured or underinsured, or if their plans don’t cover the drug,” Cubanski said. “The affordability challenge is likely to persist, even if we have a broader set of drugs that are available through direct-to-consumer sales.”
It also is unclear whether direct-to-consumer programs will satisfy Trump. In his letters to drugmakers, Trump called for them to extend most-favored-nation pricing for all of their drugs to all Medicaid patients and provide MFN pricing for newly-launched medicines moving forward.
“There is a world where MFN kind of gets rebranded, redefined as something else, and as something else, might be this [direct-to-consumer] pathway,” said one pharmaceutical lobbyist granted anonymity to discuss the industry’s efforts to respond to Trump’s demands. He added that “the White House really seemed to like” the July announcement by Bristol Myers Squibb and Pfizer to offer a new direct-to-patient option to buy Eliquis.
The companies’ superficial fix “was one of the more cynical things I’d ever seen,” the pharmaceutical lobbyist said.
But drugmakers are already cautioning that offering a most-favored nation price in Medicaid could have unintended cascading effects on the broader drug market. They are particularly concerned that prices in the 340B program, through which providers serving low-income communities purchase discounted drugs, could be impacted by low Medicaid payments. This in turn could reduce drugmaker revenues.
Creating DTC programs for certain drugs is a relatively straightforward process for manufacturers, according to Cubanski. But the other asks in Trump’s letters to drugmakers, such as offering a most-favored nations price in Medicaid or equalizing future list price launches between the U.S. and other nations, may be difficult to achieve in a short timeframe and “may not be workable at all,” she added.
That’s partly because other nations have nationalized health care insurance systems that can make decisions about whether to cover drugs based on the price drugmakers are willing to accept.
“It’s just not clear to me how drug companies can actually turn on a dime in terms of how their drugs are priced in other countries, versus what prices we have available to us in the U.S. and make these arrangements happen in a way that will be satisfactory to the president,” Cubanski said.
Rahul Gupta, who previously worked as the director of the Office of National Drug Control Policy under Biden, said the Make America Healthy Again movement’s reliance on voluntary approaches could also make it more challenging for businesses to plan ahead.
“Initially, there’s nothing wrong with that, but at some time there’s going to have to be clear industry standards that are not confusing and that are really clear,” Gupta said. “Business does well when there are certainties in the system and predictability.”
Lauren Gardner contributed to this report.
