Trump’s MFN drug pricing plan raises concerns about Canada access and prices
Trump’s Most Favoured Nation drug pricing plan would tie some U.S. drug prices to lower foreign prices. The source articles say the policy could delay launches in Canada, raise Canadian prices and affect R&D decisions.
Donald Trump’s Most Favoured Nation drug pricing plan would tie U.S. prices for certain medicines to prices in other developed countries, including potentially Canada. The policy aims to lower drug prices for Americans, but the source articles say it could affect pharmaceutical innovation, drug launches and access to new medicines in Canada.
Under one description of the plan, U.S. prices of brand-name medicines will be based on prices in Canada, Denmark, France, Germany, Italy, Japan, Switzerland and the U.K., with the U.S. price set equal to the second lowest, adjusting for differences in GDP per capita. Another article says the policy aims to cap Medicare payments for drugs at the lowest price paid by other developed countries. Trump is also using tariffs to pressure drug companies to reinvest in R&D in the U.S.; beginning in August, the tariff on pharmaceuticals and their ingredients imported into the U.S. will be 100 per cent, while companies that commit to reshoring will only pay 20 per cent while their new U.S. facilities are under construction, and companies that also agree to MFN pricing will pay no tariff at all during construction. One source says 17 major companies have committed to both reshoring and MFN pricing.
The articles say drug developers are reassessing how they market medicines in Europe and other countries, including Canada, where drug prices are much lower than in the U.S. Some companies are deciding to delay or not launch new drugs at all in some countries, preferring to lose entire markets rather than agree to low prices that, when used in the MFN price test, will severely damage their U.S. revenue. Others warn they will cut R&D in Europe unless governments increase what they are willing to pay.
One source says Canada already ranked well down manufacturers’ priority lists for launching new medicines even before MFN. Another says Canadian patients already wait an average of 450 more days than Americans to get access to new drugs, because of slower submissions and approvals, and that some drugs might not even become available to the Canadian market at all.
The articles also describe Canada’s pricing system for patented medicines. Canada’s Drug Agency evaluates new medicines for all provincial drug plans except Quebec’s, and recent reimbursement recommendations have almost all been conditional on clinical criteria and/or a price cut commonly expressed as a specific percentage reduction required to reach a value-for-money benchmark. In the past five years, more than half of those recommended price reductions were 73 per cent or higher. Because negotiated prices remain confidential, one article says Canadian prices cannot be directly compared with those in the other MFN reference countries, but argues they are likely at the lower end.
Another source says the Patented Medicine Prices Review Board sets a maximum price for new patented medicines and that Canada recently removed the U.S. from the list of comparator nations used to calculate the maximum price for new drugs. The same article says the United Kingdom recently struck a deal with the U.S. that will see the U.K. increase spending on branded medicines by 25% and raise cost-effectiveness thresholds.
Across the articles, the common concern is that if Canada becomes a reference point for U.S. pricing benchmarks, pharmaceutical companies could raise prices in Canada, delay launches or reduce research activity tied to lower international pricing.