Trump to Sign Executive Order Slashing Drug Prices—Immediate & Long-Term Implications
President Donald Trump is planning to sign an executive order this morning immediately reducing prescription drug prices by 30–80% and introducing a “most favored nation” reference pricing policy to tie US prescription drug prices to those paid in other high-income countries.
The ripple effects are already visible: global pharma stocks have dipped, signalling widespread concerns on the global biopharmaceutical industry. The US accounts for upwards of 45% of total global biopharmaceutical sales. While price cuts will have an immediate impact on pharma revenue forecasts for FY26 and beyond, the introduction of price referencing is likely to have more dramatic impacts on global markets.
US to lose its status as global pharmaceutical industry leader?
For decades, the global biopharmaceutical industry has been US-centric. R&D activities and access strategies have focused on access to the US market as a key priority. As revenue potential in the US declines, pharma may need to look at other emerging markets to fill the gap. High population countries like India and China are likely to account for an increasing proportion of global revenue in coming years, particularly if companies invest strategically in local manufacturing, production and clinical research. Europe and the Middle East’s influence may also grow in relative terms, giving these settings more power to shape policy and dictate drug pricing.
US reference pricing will reduce global access to medicines
Introduction of International reference pricing (IRP) to the US will have an immediate and dramatic impact on global market access strategy. Access, Pricing and Commercial teams will now need to consider how local pricing strategies will impact their revenue in the US. This will have an immediate impact on the commercial viability of launching in markets price-referenced by the US, as any revenue gains from market expansion will be offset by price erosion in the US. Confidential drug pricing may provide a mechanism to alleviate some of these impacts, provided countries are willing to accept markedly higher list prices and discount levels.
Long term R&D shocks expected
Given declining revenue, companies will need to be more strategic with how they invest in research and development (R&D). The unavoidable impact will likely be fewer pipelines being green lit for funding and reduced mergers and acquisitions (M&A) activity. The number of new pharmaceutical agents and therapeutics coming to market may decline over the next decade. R&D in disease areas where potential returns on investment are more limited (e.g. rare and/or infectious diseases) may be hit harder than others where market returns are potentially higher (e.g. cancer and other chronic conditions).
Does this mark the start of a new era in the global biopharmaceutical market, with greater focus on ex-US markets? Will biotech and pharma rethink their pricing corridors and evidence generation plans? As IRP gains traction, the long-standing practice of confidential pricing may also come under pressure, raising questions about transparency, equity, and the future of global market access strategies.
