Trump's Drug Pricing Shake-Up: New Executive Order Demands Global Price Equalization

By Big Pharma News Team
Washington, D.C. – May 14, 2025

In what healthcare analysts are calling one of the most aggressive attempts yet to tackle America's sky-high prescription drug costs, President Donald Trump signed an executive order yesterday demanding immediate price equalization between U.S. and foreign drug prices. The policy, branded "Delivering Most-Favored-Nation Drug Pricing to American Patients," aims to dramatically reduce what Americans pay for prescription medications, potentially slashing prices by up to 90%.

"We're all gonna pay the same: we're gonna pay what Europe's gonna pay," declared Trump at a press conference announcing the order. "Whatever the lowest price paid for a drug in other developed countries, that is the price that Americans will pay."

The bold move comes as recent research from the RAND Corporation confirms what many Americans already experience at the pharmacy counter: U.S. drug prices are now 2.78 times higher than those in other developed nations, with brand-name medications costing a staggering 4.22 times more than in comparable countries.

Radical Restructuring of the Market

The executive order outlines several groundbreaking policies. Primarily, it requires U.S. drug prices to be benchmarked to the "most-favored-nation" (MFN) rate—defined as the lowest price charged for a drug in any advanced economy. Within 30 days, the administration will begin communicating price targets to drug companies, with instructions to sell directly to patients at these reduced rates.

"We're going to totally cut out the famous middlemen," Trump stated, referring to pharmacy benefit managers (PBMs) and other supply chain intermediaries that have come under increasing scrutiny for their role in high drug costs.

CMS Administrator Dr. Mehmet Oz confirmed that the plan envisions direct-to-consumer sales by manufacturers at MFN pricing, essentially bypassing insurance and government reimbursement systems altogether. This would represent a radical departure from the current multi-layered U.S. drug distribution system.

International Pressure and Trade Leverage

The executive order also directs the U.S. Trade Representative and Secretary of Commerce to target foreign countries that Trump accuses of "purposefully and unfairly undercutting market prices" and thereby contributing to inflated costs in the U.S.

Health Secretary Robert F. Kennedy Jr. estimated that these countries may have to raise their own drug prices by up to 20% under U.S. pressure—a claim that has already sparked international concern. Trump added a clear threat to trading partners: "If they want to get cute, then they don't have to sell cars into the United States anymore."

The administration is also invoking antitrust law, directing regulators to enforce Sections 1 and 2 of the Sherman Act and Section 5 of the Federal Trade Commission Act against price-fixing or anti-competitive practices in the pharmaceutical sector.

Mixed Reactions from Stakeholders

The announcement has generated both praise and alarm across the healthcare landscape.

"Americans pay three times more for the same drugs as patients in other developed nations while big pharma spends more on marketing than research. This order could finally end that injustice," said Senator Bernie Sanders (I-VT), who has long advocated for drug pricing reform.

Former healthcare executive Dr. Melissa Warren of the Economic Policy Institute noted, "The principle is sound—why should Americans subsidize the world's drug costs?—but the implementation seems rushed. Bypassing the entire insurance system in 30 days is logistically impossible."

The pharmaceutical industry responded swiftly through its trade association PhRMA, calling the order "reckless" and warning of "devastating consequences for patients." Industry representatives argue that the policy would stifle innovation and lead to drug shortages.

"This approach ignores the reality that European price controls already delay patient access to new medications," said PhRMA President Stephen Ubl. "Importing those restrictions to the U.S. will only delay American patient access to future treatments."

Legal Challenges Ahead

Legal experts anticipate immediate court challenges to the order. Previous attempts to implement MFN pricing during Trump's first term were blocked by federal courts on administrative and constitutional grounds.

"There are serious questions about whether such sweeping changes can be implemented through executive action alone," explained Lisa Robertson, healthcare policy attorney at Georgetown Law. "Compelling companies to adopt specific pricing terms—especially through executive action—could face legal scrutiny under the Administrative Procedure Act and constitutional protections against government takings without just compensation."

Implementation Questions Remain

Despite the bold rhetoric, the executive order leaves many implementation questions unanswered. It's unclear how the administration would regulate, monitor, and enforce pricing for thousands of prescription drugs. The order doesn't specify whether it will rely on list prices or net prices (after confidential rebates and discounts), and offers limited guidance on implementation logistics or patient access.

Healthcare economist Dr. Sanjay Patel of the Peterson Center on Healthcare compared the proposal to various European models: "Countries like Germany and the UK have spent decades building systems to evaluate drug value and negotiate prices. They have unified purchasing power through national health systems. The U.S. has none of that infrastructure."

Impact on Drug Supply Chain

The order's elimination of "middlemen" would profoundly impact the current drug distribution system. Pharmacy benefit managers, wholesalers, and retail pharmacies—which collectively employ hundreds of thousands of Americans—would see their business models upended.

The three dominant PBMs—CVS Caremark, Express Scripts, and OptumRx—which control approximately 80% of prescription claims, have been criticized for practices like "spread pricing" and rebate retention that critics say inflate costs. These companies saw their stock prices fall sharply following the announcement.

"There are legitimate concerns about PBM practices and market concentration," acknowledged Dr. Kevin Schulman, professor of medicine at Stanford University. "But completely eliminating their role without a transition plan risks chaos in the drug supply chain."

Potential Winners and Losers

While the proposal aims to benefit American patients through lower prices, analysts point to potential trade-offs.

"If implemented as described, this could dramatically lower out-of-pocket costs for brand-name medications, particularly for seniors and those with chronic conditions," said Tricia Neuman, Executive Director of the Program on Medicare Policy at Kaiser Family Foundation.

However, hospitals, doctors, and pharmacies worry about disruptions to the medicine supply chain. Small, independent pharmacies—already struggling to compete with mail-order services and large chains—could face particular challenges if manufacturer direct-to-consumer models become predominant.

The impact on pharmaceutical innovation remains a central debate. While the industry warns of reduced R&D investment, critics point to data showing many large pharmaceutical companies spend more on marketing and shareholder returns than on research.

Looking Ahead

As stakeholders digest the far-reaching proposal, most agree that implementation would be far more complex than the executive order suggests. The 30-day timeline for price targeting has struck many observers as particularly unrealistic given the complexity of the pharmaceutical supply chain.

"Whether this represents a genuine policy shift or is primarily a political statement ahead of midterm elections remains to be seen," commented political analyst Marcus Johnson. "Previous bold drug pricing initiatives have often been scaled back after industry pushback and legal challenges."

For American patients frustrated by high drug costs, the proposal offers both hope and uncertainty. The coming weeks will likely determine whether this executive order represents a revolutionary transformation of pharmaceutical pricing or joins previous reform efforts that promised more than they delivered.

Cancer Meds A Prime Example

I've created a comprehensive graphic comparing the monthly treatment costs of expensive cancer medications across international markets. The chart shows stark price disparities between the U.S. and other countries, with a particular focus on patent-protected drugs and generic availability.

Key insights from the visualization:

Dramatic price disparities: The chart clearly shows that U.S. cancer medication prices are approximately 3-5 times higher than international averages. For instance, Xtandi (enzalutamide) costs about $15,922 per month in the U.S., while the international average is only around $4,800.
Generic availability impact: For enzalutamide (the generic version of Xtandi), the chart highlights how generic versions can dramatically reduce costs in international markets (as low as $400 monthly in some countries), but these generics aren't yet available in the U.S.
Consistent pattern across medications: The visualization includes multiple expensive cancer treatments (Xtandi/enzalutamide, Erleada/apalutamide, and Revlimid/lenalidomide), all showing similar pricing patterns with U.S. prices significantly higher than international minimums, averages, and even maximums.
Pricing range: The international pricing shows significant variation, with minimum prices often being a fraction of the maximum international prices, yet even the highest international prices remain substantially below U.S. prices.

The data reflects pricing information from 2022-2025 and is sourced from RAND studies, Drugs.com, Knowledge Ecology International, PharmacyChecker, and Medical News Today. This visualization effectively illustrates why President Trump's "Most-Favored-Nation" executive order targets these substantial price disparities.

Trump Orders Most-Favored-Nation Drug Pricing: Radical Equalization or Global Price War?

Comparative Drug Pricing Across Nations: Impact of Pharmaceutical Patents and Research on Medication Affordability

Authors: S L Pendergast
Institution: IPCSG
Date: May 14, 2025

Abstract

This paper examines the disparities in prescription drug pricing across different countries, with particular focus on how patent systems and pharmaceutical industry practices influence medication costs and availability. Drawing from comparative data between the United States and other developed nations, we analyze how intellectual property protections, research and development investments, marketing expenditures, and regulatory frameworks contribute to the significant pricing disparities observed globally. The research demonstrates that Americans pay substantially more for prescription medications than residents of comparable countries, despite similar levels of innovation and drug availability. We conclude with policy recommendations aimed at balancing the need for continued pharmaceutical innovation with improved medication affordability and access.

Keywords: pharmaceutical economics, drug pricing, patents, international pricing models, healthcare policy

1. Introduction

Access to affordable medications represents a critical component of effective healthcare systems globally. However, substantial price disparities exist between countries, with the United States consistently paying significantly higher prices than other developed nations for identical pharmaceutical products. This paper examines the complex factors that drive these disparities, with particular focus on how patent systems and pharmaceutical industry practices influence drug prices and availability across different markets.

The pharmaceutical industry often justifies high drug prices in the United States by citing the substantial costs of research and development (R&D) and the need for patent exclusivity to recoup these investments. However, these justifications require critical examination in light of industry spending patterns, global pricing strategies, and the impact of patent laws on market competition. By analyzing comparative data on drug pricing, patent systems, and pharmaceutical industry practices across different countries, this research aims to contribute to a more nuanced understanding of the factors that drive medication costs and to identify potential policy solutions.

2. Literature Review

2.1 Global Drug Pricing Disparities

Research consistently demonstrates significant pricing disparities for prescription medications between the United States and other developed countries. According to a 2022 RAND Corporation study, prescription drug prices in the United States average 2.78 times those in 33 OECD comparison countries (RAND, 2022). The gap is even wider for brand-name drugs, with U.S. prices averaging 4.22 times higher than those in comparison nations (RAND, 2024). A Kaiser Family Foundation analysis found that per capita spending on prescription medicines in the U.S. was $1,126 in 2019, while comparable countries spent an average of $552 (KFF, 2024).

These price differences are not uniform across all drug categories. While branded drugs in the U.S. cost significantly more than in other countries, generic medications are often less expensive, with U.S. prices at approximately 67% of the average cost in comparison nations (RAND, 2024). This dichotomy reflects the unique structure of the U.S. pharmaceutical market, where 90% of prescription volume consists of generics, yet they account for only 8% of total drug spending.

2.2 Patent Systems and Market Exclusivity

The patent system serves as a fundamental mechanism for incentivizing innovation in the pharmaceutical industry. By granting market exclusivity for a limited period, patents enable pharmaceutical companies to recoup R&D investments and generate profits that theoretically fund future research. In the United States, the standard patent term is 20 years from the filing date, though the effective market exclusivity period is typically shorter due to the time required for regulatory approval.

However, studies have identified concerning trends in pharmaceutical patenting practices. Research has shown that 74% of new drug patents granted between 2005 and 2015 were for existing drugs rather than new medications (CNBC, 2018). This practice of "evergreening" or creating "patent thickets" extends market exclusivity well beyond the initial patent period, delaying generic competition and maintaining higher prices.

The impact of patent expiration on drug prices varies by country but generally leads to significant price reductions. When patents expire and generic competition enters the market, prices typically decrease dramatically, with the first generic competitor often offering a 20-30% discount compared to the branded product, and subsequent generic entry driving prices down further (Chicago-Kent Journal of Intellectual Property, 2023).

2.3 R&D Investments vs. Marketing Expenditures

The pharmaceutical industry frequently justifies high drug prices as necessary to fund costly R&D efforts. Industry organizations report that pharmaceutical companies spend substantial amounts on R&D annually, with estimates ranging from $83 billion to $276 billion globally (R&D World, 2024). However, research has questioned the relationship between R&D spending and pricing strategies, with some studies finding little correlation between research investments and treatment costs.

Analyses of financial reports from major pharmaceutical companies have revealed that many firms spend more on marketing and sales than on R&D. A study examining the 10 largest pharmaceutical companies by revenue found that 7 out of 10 spent more on selling and marketing expenses than on R&D, with the difference amounting to $36 billion, or 37% more spending on marketing than research (AHIP, 2024). Another analysis found that nearly two-thirds of the 100 biggest pharmaceutical corporations spent at least twice as much on marketing as they did on R&D (National Nurses United, 2017).

2.4 Regulatory Frameworks and Pricing Controls

Different countries employ various regulatory approaches to control pharmaceutical prices. Many European countries, Canada, and Japan use reference pricing systems, health technology assessments, and direct price negotiations. In contrast, the United States lacks a centralized mechanism for drug price regulation, relying instead on market competition and fragmented negotiation by various payers.

Price controls in other countries are often cited by the pharmaceutical industry as shifting costs to the U.S. market. However, research suggests that the relationship between international price controls and U.S. pricing is more complex than a simple cost-shifting model. Countries with strong price regulation frameworks tend to achieve lower prices without demonstrably compromising drug availability or innovation.

3. Research Methodology

This study employs a comparative analysis approach to examine drug pricing disparities across different countries and the contributing factors. Data was collected from multiple sources, including:

Published research studies from academic institutions and policy organizations
Government reports and statistical databases
Financial reports from pharmaceutical companies
International health organization publications
Health economics and policy literature

The analysis focuses on comparing drug prices, patent systems, industry spending patterns, and regulatory frameworks across the United States, European Union countries, Canada, Japan, and Australia. Special attention is given to the relationship between patent protection, market exclusivity, and price dynamics, as well as the allocation of pharmaceutical company resources between R&D and marketing activities.

4. Findings

4.1 Role of Insurance Systems and Pharmacy Benefit Managers

The structure of insurance systems and the role of intermediaries such as Pharmacy Benefit Managers (PBMs) significantly influence drug pricing and availability across countries. Our analysis reveals several key differences in how these systems function:

U.S. Insurance System Fragmentation: The United States operates a highly fragmented insurance system with multiple private insurers, public programs (Medicare, Medicaid), and self-insured employers. This fragmentation reduces collective negotiating power compared to single-payer or unified purchasing systems in many European countries and Canada.
Role of Pharmacy Benefit Managers: PBMs in the United States serve as intermediaries between insurers, manufacturers, and pharmacies. They negotiate rebates and discounts, create formularies, and process claims. While theoretically positioned to reduce costs, several aspects of PBM operations have been identified as potentially contributing to higher drug prices:

a) Rebate Retention: PBMs often retain a portion of manufacturer rebates rather than passing them entirely to insurers or patients. The larger the rebate (often tied to higher list prices), the greater the potential PBM profit.

b) Spread Pricing: PBMs may charge insurers more for drugs than what they reimburse to pharmacies, keeping the difference as profit. This practice lacks transparency and can inflate costs.

c) Formulary Management: PBMs may prefer higher-priced drugs with larger rebates over lower-cost alternatives, potentially steering patients toward more expensive medications.

d) Market Concentration: The PBM market is highly concentrated, with three companies controlling approximately 80% of the market, limiting competition and potentially enabling pricing practices that prioritize profits over cost reduction.
European and Canadian Approaches: In contrast to the U.S. system, many European countries and Canada employ direct negotiation between government payers and manufacturers, health technology assessments to determine value-based pricing, and reference pricing systems. These approaches generally result in greater price transparency and lower overall drug prices.
Out-of-Pocket Costs: The structure of insurance benefit designs also impacts affordability. In the United States, patients often face substantial cost-sharing through deductibles, co-insurance, and co-payments, creating financial barriers to access. European systems typically have lower out-of-pocket requirements, though they may have more restrictive formularies.

These structural differences in insurance systems and the role of intermediaries contribute significantly to the pricing disparities observed between the United States and other developed countries. The more fragmented U.S. system, with multiple intermediaries each seeking to maximize profits, creates additional cost layers that are largely absent in more centralized healthcare systems.

4.2 Comparative Drug Pricing Analysis

Our analysis confirms that prescription drug prices in the United States substantially exceed those in other developed countries. Based on the most recent data available, U.S. prices across all drugs (brands and generics) are nearly 2.78 times as high as prices in comparison countries. For brand-name drugs specifically, U.S. prices are at least 3.22 times higher than in comparison countries, even after adjustments for estimated U.S. rebates.

These price differentials translate to significant spending disparities. While the United States accounts for approximately 24% of global pharmaceutical volume, it represents about 62% of global pharmaceutical sales. This disproportionate spending is not explained by differences in drug utilization, as surveys indicate similar rates of medication use between the U.S. and comparable countries.

4.2 Patent Systems and Their Impact on Pricing

Patent systems across countries share fundamental similarities but differ in implementation and market impact. Our analysis identifies several key findings regarding the relationship between patent protection and drug pricing:

Patent Evergreening: The practice of obtaining multiple sequential patents on minor modifications of existing drugs is particularly prevalent in the United States, effectively extending market exclusivity well beyond the original patent term. For example, AbbVie filed approximately 225 patents for their drug Humira, generating an estimated $19 billion in additional healthcare costs due to delayed generic competition.
Delayed Generic Entry: The combination of patent litigation, pay-for-delay settlements, and regulatory barriers in the U.S. often postpones generic competition compared to other markets. When generics do enter the market, their impact on prices is more pronounced in systems with automatic substitution policies and fewer barriers to competition.
International Patent Differences: The study of orphan drugs across the EU and U.S. markets reveals that U.S. prices were found to be 1.8 to 4 times higher than international prices, with price differentials tending to grow over time after market introduction.
Patent Expiration Effects: The entry of generic competition after patent expiration causes significant price reductions in all markets studied, though the magnitude of these reductions varies by country. Markets with more robust generic competition experience larger price decreases.

4.3 R&D Investment vs. Marketing Expenditures

Our analysis of pharmaceutical company financial reports reveals several patterns regarding the allocation of resources between R&D and marketing:

The pharmaceutical industry invests substantially in R&D, with estimated global expenditures ranging from $238 billion to $276 billion annually. However, these investments are not evenly distributed across therapeutic areas, with some high-need conditions receiving limited research attention.
Despite claims that high prices are necessary to fund innovation, many pharmaceutical companies allocate more resources to marketing and sales than to R&D. Seven of the ten largest pharmaceutical companies spent more on marketing than on research during 2020, despite the global focus on developing COVID-19 treatments and vaccines.
Profit margins in the pharmaceutical industry average approximately 15%, comparable to public utilities but higher than many other industries. However, these aggregate figures mask significant variations across companies and therapeutic areas.
A substantial portion of innovative drug research, particularly early-stage discovery, is funded by public sources, primarily through the National Institutes of Health (NIH) in the United States. An estimated 75% of the most innovative drugs can trace their development to NIH funding.

4.4 Regulatory Frameworks and Impact on Pricing

Different regulatory approaches to pharmaceutical pricing demonstrate varying levels of effectiveness in controlling costs while maintaining innovation and access:

Reference Pricing Systems: Countries employing external reference pricing (ERP), which bases domestic prices on those in reference countries, achieve lower average prices. However, this approach can create strategic delays in product launches in lower-price markets.
Negotiation Power: Countries with single-payer healthcare systems or centralized purchasing leverage greater negotiating power with pharmaceutical companies, resulting in lower agreed prices. The fragmented U.S. system, with multiple payers and limited coordination, reduces negotiating leverage.
Value-Based Assessment: Health technology assessment (HTA) frameworks that evaluate cost-effectiveness, as employed in the UK, Australia, and Canada, help align drug prices with therapeutic value and improve resource allocation.
Price Transparency: Markets with greater price transparency typically achieve lower prices. The complex and opaque pricing system in the U.S., involving list prices, rebates, and confidential discounts, contributes to higher effective prices.

5. Discussion

5.1 The Impact of Insurance Systems and PBMs on Drug Pricing

The analysis of insurance systems and PBMs reveals critical insights into how these structures influence pharmaceutical pricing. The U.S. approach, characterized by fragmentation and multiple intermediaries, creates several inefficiencies that contribute to higher drug prices. The current PBM model in particular presents concerns regarding misaligned incentives, where practices such as rebate retention and spread pricing may prioritize profit maximization over cost reduction.

The lack of transparency in PBM operations obscures true drug costs and makes it difficult for policymakers, insurers, and patients to make informed decisions. While PBMs argue they utilize their negotiating power to secure rebates and discounts, the evidence suggests that these savings are not consistently passed through to patients or payers. Moreover, the highly concentrated PBM market—with three companies controlling approximately 80% of prescriptions—limits competition and may enable practices that increase rather than decrease costs.

In contrast, countries with more centralized negotiation and purchasing power typically achieve lower prices. Single-payer systems or coordinated purchasing consortia can leverage their consolidated market power to secure more favorable terms. The direct price negotiation employed by many European countries eliminates layers of intermediaries, each taking a profit margin, and results in more transparent and lower overall prices.

These findings highlight the need for reforms to the U.S. insurance and PBM systems to improve transparency, realign incentives, and strengthen negotiating leverage. Options could include requiring full pass-through of rebates, prohibiting spread pricing, enhancing transparency in PBM operations, and implementing more coordinated purchasing strategies for public programs.

The findings suggest that the relationship between patent protection, R&D investment, and drug pricing is more complex than often portrayed. While patents provide necessary incentives for innovation, the current implementation—particularly in the United States—allows for strategic behaviors that extend monopoly pricing well beyond what is necessary to recoup legitimate R&D investments.

The significant price disparities between the United States and other developed countries indicate that lower prices are compatible with continued pharmaceutical innovation. Countries with lower drug prices still benefit from access to innovative medications, often with minimal delays in availability. This suggests that more moderate pricing models can support both innovation and affordability.

The allocation of pharmaceutical company resources between R&D and marketing raises questions about industry priorities. The fact that many companies spend more on marketing than research contradicts the narrative that high prices are primarily driven by innovation costs. While marketing serves legitimate purposes in educating healthcare providers and patients about available treatments, the scale of these expenditures suggests a focus on market expansion rather than scientific advancement.

5.2 The Role of Patents in Drug Pricing

Patents clearly play a critical role in pharmaceutical innovation by providing temporary market exclusivity that enables companies to recoup R&D investments. However, the current patent system, particularly in the United States, has evolved in ways that allow for strategic manipulation that extends exclusivity periods without corresponding public benefit.

The practice of "evergreening" through sequential patents on minor modifications to existing drugs represents a particularly problematic aspect of the current system. These patents often provide little therapeutic advancement while substantially delaying generic competition and maintaining higher prices. Similarly, "patent thickets"—dense networks of overlapping patents around a single product—create significant barriers to competition.

The evidence suggests that reforms to patent laws and their implementation could help balance innovation incentives with more reasonable pricing. These could include more rigorous standards for follow-on patents, limits on patent term extensions, and streamlined pathways for resolving patent disputes.

5.3 International Pricing Strategies and Global Equity

The significant price disparities between countries raise important questions about global equity in pharmaceutical pricing. While some price differentiation based on economic capacity is appropriate, the extreme nature of current disparities—with U.S. prices often several times higher than those in other wealthy nations—suggests market dysfunction rather than rational economic differentiation.

The pharmaceutical industry often argues that higher U.S. prices subsidize innovation that benefits global patients. However, this argument conflicts with the observation that many pharmaceutical companies maintain high profit margins across all markets. Furthermore, the concentration of marketing expenditures in the U.S. market suggests that premium pricing supports commercial activities rather than additional research.

A more balanced approach to global pricing would maintain appropriate incentives for innovation while ensuring that no single country bears a disproportionate share of global R&D costs. This would involve more transparent and equitable pricing strategies that reflect both the value of medications and the economic capacity of different markets.

6. Policy Implications and Recommendations

Based on our findings, we propose several policy recommendations to balance pharmaceutical innovation with improved affordability and access:

6.2 Patent System Reforms

Enhanced Patentability Standards: Implement more rigorous standards for pharmaceutical patents, particularly for follow-on patents, requiring meaningful therapeutic improvements rather than minor modifications.
Patent Term Optimization: Review and potentially reform patent term extensions to ensure they compensate for genuine regulatory delays without providing excessive exclusivity periods.
Streamlined Patent Challenge Processes: Develop more efficient mechanisms for resolving patent disputes, reducing litigation costs and delays in generic market entry.

6.3 Pricing and Reimbursement Reforms

Value-Based Pricing: Implement frameworks that link drug prices more closely to demonstrated therapeutic value and comparative effectiveness.
Enhanced Negotiation Authority: Authorize public payers to negotiate prices directly with pharmaceutical manufacturers, leveraging collective purchasing power.
Transparency Requirements: Mandate disclosure of development costs, marketing expenditures, and pricing strategies to enable more informed policy decisions and market function.

6.4 Innovation Incentives

Targeted Research Incentives: Develop alternative incentives for innovation in high-priority areas, such as antibiotics, rare diseases, and neglected tropical diseases.
Public R&D Investment: Maintain robust public funding for basic research while exploring mechanisms to ensure that publicly funded innovations translate to reasonably priced products.
Collaborative Research Models: Encourage pre-competitive collaboration and public-private partnerships to share research costs and risks.

6.5 International Coordination

Reference Pricing Harmonization: Develop more coherent approaches to international reference pricing that balance global equity with innovation incentives.
Regulatory Cooperation: Enhance coordination between regulatory authorities to reduce duplicative requirements and streamline approval processes.
Global Access Frameworks: Support expanded initiatives for differential pricing and access programs in lower-income countries.

7. Conclusion

This analysis demonstrates that the current pharmaceutical pricing system, particularly in the United States, creates substantial disparities that cannot be fully explained or justified by R&D costs or innovation requirements. Americans pay significantly higher prices for prescription medications than residents of other developed countries, despite similar levels of innovation and drug availability.

The patent system, while essential for incentivizing pharmaceutical innovation, has evolved in ways that enable strategic behaviors that extend market exclusivity and maintain high prices beyond what is necessary to support R&D. Simultaneously, the allocation of pharmaceutical company resources between R&D and marketing suggests that other factors beyond innovation costs drive pricing decisions.

Effective policy solutions will require balanced approaches that maintain incentives for genuine innovation while improving affordability and access. By reforming patent systems, enhancing pricing transparency, implementing value-based reimbursement, and fostering international coordination, policymakers can work toward pharmaceutical markets that better serve both innovation and public health needs.

The recent executive order by President Trump aiming to implement "Most-Favored-Nation" drug pricing in the United States represents one approach to addressing price disparities, though its implementation details and potential consequences remain uncertain. Regardless of the specific mechanisms adopted, the evidence suggests that more moderate pricing models can be compatible with continued pharmaceutical innovation and improved global access to medications.

References

AHIP. (2024). New study: In the midst of COVID-19 crisis, 7 out of 10 big pharma companies spent more on sales and marketing than R&D. Retrieved from https://www.ahip.org/news/articles/new-study-in-the-midst-of-covid-19-crisis-7-out-of-10-big-pharma-companies-spent-more-on-sales-and-marketing-than-r-d
American Progress. (2023). 5 things to know about pharmacy benefit managers. Retrieved from https://www.americanprogress.org/article/5-things-to-know-about-pharmacy-benefit-managers/
Brookings Institution. (2023). A brief look at current debates about pharmacy benefit managers. Retrieved from https://www.brookings.edu/articles/a-brief-look-at-current-debates-about-pharmacy-benefit-managers/
Chicago-Kent Journal of Intellectual Property. (2023). How do patents impact drug prices? Retrieved from https://studentorgs.kentlaw.iit.edu/ckjip/how-do-patents-impact-drug-prices/
CNBC. (2018). The problem with high drug prices isn't 'foreign freeloading,' it's the patent system. Retrieved from https://www.cnbc.com/2018/06/25/high-drug-prices-caused-by-us-patent-system.html
Commonwealth Fund. (2025). What pharmacy benefit managers do, and how they contribute to drug spending. Retrieved from https://www.commonwealthfund.org/publications/explainer/2025/mar/what-pharmacy-benefit-managers-do-how-they-contribute-drug-spending
CVS Health. (2024). The value of pharmacy benefit managers. Retrieved from https://www.cvshealth.com/services/prescription-drug-coverage/pharmacy-benefits-management.html
JAMA. (2022). Negotiating drug prices in the US—Lessons from Europe. Retrieved from https://jamanetwork.com/journals/jama-health-forum/fullarticle/2799713
JAMA. (2023). Pharmacy benefit managers. Retrieved from https://jamanetwork.com/journals/jama-health-forum/fullarticle/2811344
Journal of Ethics, American Medical Association. (2022). What should US policymakers learn from international drug pricing transparency strategies? Retrieved from https://journalofethics.ama-assn.org/article/what-should-us-policymakers-learn-international-drug-pricing-transparency-strategies/2022-11
Kaiser Family Foundation. (2024). How do prescription drug costs in the United States compare to other countries? Retrieved from https://www.healthsystemtracker.org/chart-collection/how-do-prescription-drug-costs-in-the-united-states-compare-to-other-countries/
National Association of Insurance Commissioners. (2023). Insurance topics: Pharmacy benefit managers. Retrieved from https://content.naic.org/insurance-topics/pharmacy-benefit-managers
National Nurses United. (2017). RN report: Pharma giants spend far more on marketing, sales than they do on research and development. Retrieved from https://www.nationalnursesunited.org/press/rn-report-pharma-giants-spend-far-more-marketing-sales-they-do-research-and-development
National Pharmaceutical Council. (2024). U.S. vs. EU: Not a direct comparison when it comes to drug pricing. Retrieved from https://www.npcnow.org/resources/us-vs-eu-not-direct-comparison-when-it-comes-drug-pricing
PharmacyChecker. (2024). Do pharmaceutical companies spend more on marketing than research and development? Retrieved from https://www.pharmacychecker.com/askpc/pharma-marketing-research-development/
PMC. (2024). Healthcare systems across Europe and the US: The managed entry agreements experience. Retrieved from https://pmc.ncbi.nlm.nih.gov/articles/PMC9914690/
PMC. (2022). Comparison of US and EU prices for orphan drugs in the perspective of the considered US orphan drugs act modifications and discussed price-regulation mechanisms adjustments in US and European Union. Retrieved from https://pmc.ncbi.nlm.nih.gov/articles/PMC9566473/
PMC. (2024). International prescription drug price comparisons: Estimates using 2022 data. Retrieved from https://pmc.ncbi.nlm.nih.gov/articles/PMC11147645/
PMC. (2018). The impact of patent expiry on drug prices: A systematic literature review. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6132437/
RAND Corporation. (2022). International prescription drug price comparisons: Current empirical estimates and comparisons with previous studies. Retrieved from https://www.rand.org/pubs/research_reports/RR2956.html
RAND Corporation. (2024). International prescription drug price comparisons: Estimates using 2022 data. Retrieved from https://www.rand.org/pubs/research_reports/RRA788-3.html
RAND Corporation. (2024). Prescription drug prices in the U.S. are 2.78 times those in other countries. Retrieved from https://www.rand.org/news/press/2024/02/01.html
R Street Institute. (2024). Patent problems create higher drug prices. Time to fix the system. Retrieved from https://www.rstreet.org/commentary/patent-problems-create-higher-drug-prices-time-to-fix-the-system/
R Street Institute. (2024). The economics of drug discovery and the impact of patents. Retrieved from https://www.rstreet.org/commentary/the-economics-of-drug-discovery-and-the-impact-of-patents/
R&D World. (2024). Global pharma R&D hits $276B, triples marketing spend. Retrieved from https://www.rdworldonline.com/how-much-does-the-pharma-industry-spend-on-rd-anyway-probably-more-than-you-thought/
Reuters. (2015). Exclusive - Transatlantic divide: How U.S. pays three times more for drugs. Retrieved from https://www.reuters.com/article/us-pharmaceuticals-usa-comparison/exclusive-transatlantic-divide-how-u-s-pays-three-times-more-for-drugs-idUSKCN0S61KU20151012/
Statista. (2022). Chart: U.S. drug prices sky-high in international comparison. Retrieved from https://www.statista.com/chart/27932/us-prescription-drug-prices-in-international-comparison/
U.S. Department of Health and Human Services, ASPE. (2022). Comparing prescription drugs in the U.S. and other countries: Prices and availability. Retrieved from https://aspe.hhs.gov/reports/comparing-prescription-drugs
U.S. Department of Health and Human Services, ASPE. (2022). International prescription drug price comparisons: Current empirical estimates and comparisons with previous studies. Retrieved from https://aspe.hhs.gov/reports/international-prescription-drug-price-comparisons