US drug pricing executive order signals regulatory tensions

Trump’s revived “most-favoured-nation” drug pricing push is less about immediate price relief and more a policy provocation—signaling a deeper contest over who bears the cost of pharmaceutical innovation. Behind the populist framing lies a regulatory asymmetry the US has long tolerated: American consumers subsidizing global R&D while other countries enforce price ceilings. That asymmetry is now on notice.

The global pharmaceutical sector—already navigating patent cliffs, pricing audits, and technology assessments—is once again being drawn into a conflict between market-based access and state-imposed constraints. But unlike past cycles of pricing outrage, this one comes with sharper tools: the Inflation Reduction Act (IRA), Medicare negotiation powers, and legal traction. Sovereigns, especially in Asia and Europe, would do well to prepare for capital and policy spillovers.

The executive order—striking in tone but vague in mechanism—demands that US drug prices reflect the “lowest price available” in peer countries. This isn’t new. A similar attempt during Trump’s first term was blocked in court. The difference now lies in the legislative groundwork laid by the IRA. For the first time, Medicare has begun negotiating prices on blockbuster drugs, with discounts of up to 79% slated to take effect from 2026.

Crucially, this is not just rhetoric. The IRA permits 10 drugs in the first wave, scaling up to 20 annually. With Ozempic among the next tranche, the battle over pricing is moving from courtroom to boardroom. Drug companies are already pursuing legal challenges, but most have been unsuccessful. The policy direction—empowering the largest US payer to act like a regulator—is now structurally embedded.

Historically, tiered pricing and health technology assessments created a patchwork of global drug costs. Richer markets paid more; poorer ones negotiated or deferred. The US was the outlier—paying the highest list prices, absorbing the costs of early market access, and allowing intermediaries like pharmacy benefit managers (PBMs) to extract opaque margins.

Trump’s order and the IRA both target this structure, albeit from different angles. His “global freeloading” rhetoric seeks to punish countries that regulate prices. The IRA, by contrast, internalizes the logic of price control. Together, they signal a shift from market deference to regulatory assertion.

Singapore, among others, will feel this. As Professor Wee notes, Singapore’s public sector reforms—such as the Cancer Drug List—mirror the US trajectory toward cost-effectiveness thresholds. But unlike Australia, which uses price caps to exert leverage, Singapore remains structurally overexposed to global price recalibrations due to its small market size and limited negotiating power.

Drug developers are watching the US closely—not just for pricing precedent but for access timing. The US, as the world’s most profitable pharmaceutical market, is where new therapies launch first. If revenue expectations collapse, so might rollout priorities.

This matters for sovereign health systems and insurance-linked investors alike. Countries with HTA-driven gatekeeping (UK, Germany) may benefit from a new pricing equilibrium. Those with passive procurement systems (Singapore, Malaysia) may face higher transfer prices unless they accelerate assessment frameworks.

The capital allocation story is also shifting. Pharmaceutical equities saw brief selloffs after Trump’s Facebook post—but recovered once it became clear the order lacked detail. Still, the direction is clear: Medicare price setting, if scaled, will compress margins and reduce the relative attractiveness of high-price biologic portfolios. Expect more M&A toward generics and adjacent service platforms with defensible cost bases.

This isn’t regulatory theater. It’s a soft regime change. Trump’s rhetoric may be blunt, but the policy machinery is now bipartisan. Global price benchmarking is no longer a threat—it’s a trajectory. And for health systems outside the US, especially in Asia, the age of passive price-taking may be over.