U.S. President Donald Trump’s announcement that all 50 states will join his proposed drug-price lowering policy has triggered warnings from Canadian pharmaceutical experts and international researchers regarding potential global price spikes and supply disruptions. On Sept. 18, Trump stated in the Oval Office that state Medicaid programs for low-income Americans will secure lower prescription costs through manufacturer agreements matching the lowest rates paid by other developed nations. While the administration has already secured deals with 26 large pharmaceutical companies to align U.S. costs with 19 reference countries spanning Europe, Canada, Australia, Japan, and South Korea, researchers warn the policy creates strong incentives for drug makers to raise prices or restrict supply outside American borders.
How Most-Favoured Nation Pricing Works Globally
Most-favoured nation, or MFN, pricing relies on agreements requiring pharmaceutical manufacturers to match the lowest prices offered in similarly sized and wealthy countries. Although the mechanism is new to the U.S., it is already common across Canada and widely used in Europe to control prescription drug spending, according to Dr. Thomas Hwang, an assistant professor at Brigham and Women’s Hospital in Boston. Hwang explained that the policy simply reflects the U.S. desire to secure pricing parity with comparable nations. Mina Tadrous, an associate professor at the University of Toronto’s pharmacy faculty, noted that similar countries including Canada are typically bundled together based on net pharmaceutical pricing deals.
Potential Impacts on Canadian Prescription Costs
While the Trump administration’s MFN policy does not mean Canadian drug prices will automatically rise, Tadrous warned that pharmaceutical companies might seek higher prices in Canada, reduce available discounts, or delay product launches to offset or avoid lost American revenue. Industry group Innovative Medicines Canada echoed these concerns in an emailed statement, asserting that U.S. MFN pricing threatens to disrupt access to existing medications, delay new treatments, and undermine market confidence. “For Canadians waiting for a new cancer therapy, a rare disease treatment, or first-in-class medicine, these aren’t abstract policy debates,” the organization stated, emphasizing potential serious consequences for patients and their families. Nav Persaud, a family physician with St. Michael’s Hospital in Toronto, noted that many patients already struggle with daily expenses like food and rent, leading them to sacrifice necessary prescriptions because of cost barriers.
Evidence From Recent Modelling Studies and Legal Filings
Hwang and his co-authors published a modelling study in the medical journal The Lancet assessing the policy’s potential impacts inside and outside the United States. The study concluded that MFN pricing for brand-name medicines could decrease net Medicare spending while generating unintended consequences for prices and access in referenced countries. Meanwhile, copies of Pfizer and Eli Lilly agreements obtained via a lawsuit by consumer advocacy group Public Citizen reveal concerning terms that could facilitate higher prices abroad or the discontinuation of foreign supply. The documents show carve-outs exempting Eli Lilly’s popular GLP-1 weight-loss drugs, such as Zepbound, from MFN pricing, alongside a Pfizer agreement committing the company to share revenue with the U.S. government if it raises prices outside America.
Did you know? While the Trump administration initially signaled comprehensive coverage, newly reviewed legal disclosures confirm that GLP-1 drugs are not going to be subject to most-favoured nation pricing.
Frequently Asked Questions
What is most-favoured nation drug pricing?
Most-favoured nation pricing is a policy framework where pharmaceutical manufacturers agree to match the lowest prices they offer in a designated group of peer nations, aiming to reduce domestic spending for government programs like Medicaid.
Will Canadian drug prices automatically increase?
Canadian drug prices will not automatically increase, but policy experts warn that manufacturers might raise prices, trim discounts, or delay medication launches in Canada to offset lost revenue from lower U.S. pricing agreements.
Are all drugs subject to the new U.S. policy?
Stay Informed on Global Health Policy
Changes in international pharmaceutical agreements continue to evolve rapidly across North America and Europe. Share your thoughts in the comments below, explore our related coverage on pharmaceutical policy, or subscribe to our newsletter for regular updates on cross-border healthcare trends.
Keep reading