U.S. President Donald Trump has launched a brand new effort to decrease prescription drug costs for People that targets overseas nations — each for the decrease costs they pay and the potential to import cheaper medicine from these international locations.
But the federal authorities and coverage specialists say any potential impacts from the chief order signed this week — together with provide shortages and better costs — aren’t prone to hit Canada.
“I don’t think this is actually likely to be a direct threat against Canada,” mentioned Michael Regulation, a professor on the College of British Columbia and the Canada Analysis Chair in entry to medicines.
Trump’s order calls on the well being division, led by Robert F. Kennedy Jr., to dealer new value tags for medicine over the subsequent month.
If offers aren’t reached with the drugmakers, Kennedy will probably be tasked with creating a brand new rule that ties the worth the U.S. pays for drugs to decrease costs paid by different international locations.
“We’re going to equalize,” Trump mentioned at a Monday press convention. “The rest of the world is going to have to pay a little bit more, and America is going to pay a lot less.”
In Canada, drug costs are overseen by the Patented Medication Costs Evaluation Board, which informed International Information it protects Canadian customers by reviewing costs and guaranteeing they’re not “excessive.”
“If the price of a patented medicine is found to be excessive by a Hearing Panel, the Board has the power to order a reduction in the price to a non-excessive level and to enforce that order,” a spokesperson mentioned in an e-mail. “The Board is also able to order a rights holder to offset any excess revenues.”
The spokesperson added the assessment board receives publicly-available costs for medicine offered in 11 “comparator” international locations — together with Germany, the UK, Australia and Sweden — that issue into costs set in Canada.
“Since the U.S. is not in this basket of comparator countries, the (board’s) price review would not be directly affected by price changes in the U.S.,” the emailed assertion mentioned.
Regulatory businesses just like the Patented Medication Costs Evaluation Board and the pan-Canadian Pharmaceutical Alliance, which negotiates costs with drugmakers on behalf of provincial, territorial and federal medical health insurance plans, are typically why drug prices in Canada are decrease than the U.S., specialists say. Dozens of different international locations have related nationwide regulators.
In keeping with specialists who spoke with the Related Press after Trump’s announcement, the U.S. drug market principally operates as a fragmented system the place firms negotiate with particular person insurers or pharmacy profit managers, generally referred to as PBMs.
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In international locations with single regulatory businesses, a drug firm can lose out on earnings completely if a regulator walks away from negotiations, and is extra prone to settle for a lower cost than no deal in any respect.
The U.S. Congress in 2022 handed a brand new regulation that enables Medicare to barter decrease costs for a handful of prescribed drugs beginning in 2026, primarily insulin for diabetes sufferers.
A 2024 report printed by the RAND analysis group discovered, utilizing 2022 information, that costs within the U.S. had been 2.78 instances increased than these in 33 comparable international locations throughout all medicine. That features Canada, the place drug costs had been simply 44 per cent of U.S. costs, in keeping with the report.
Trump additionally threatened pharmaceutical firms with federal investigations into their practices and opening up the U.S. drug market to herald extra imported drugs from overseas if costs aren’t lowered.
Regulation mentioned pharmaceutical firms would doubtless not permit that to occur on a nationwide scale.
“I find it highly unlikely that any branded company in the United States is going to cut their margins by sending an enormous amount of drugs to Canada, only to have it come back into the United States at a lower price,” he mentioned.
“It’d be very easy for the companies to limit the extent to which that activity could take place.”
Canada additionally doesn’t have the manufacturing capability to meet mass imports to the U.S. whereas additionally fulfilling home orders, Regulation mentioned.
Particular person states have sought to supply cheaper medicine from Canada for many years.
In 2024, Florida grew to become the primary state to get a drug importation program accredited by the U.S. Meals and Drug Administration (FDA) underneath federal regulation.
Greater than a 12 months later, nonetheless, this system has but to start and no medicine have been imported to Florida from Canada.
Below federal necessities, state officers should first take a look at the medicine to ensure they’re genuine and relabel them in order that they adjust to U.S. requirements.
Trump in April signed an govt order on decreasing drug prices that directed Kennedy to, amongst different issues, “streamline and improve” inside 90 days this system permitting states to import drug from Canada.
Colorado has mentioned it expects its personal Canadian drug import program to be accredited by the FDA quickly, and different states have submitted functions as effectively.
Well being Canada says it has been “taking all necessary action to safeguard the drug supply and ensure Canadians have access to the prescription drugs they need” ever because the Florida program was accredited.
A spokesperson mentioned the division has reminded drugmakers and exporters of its obligations underneath Canada’s Meals and Drug Rules, which prohibits the sale of sure medicine supposed for the Canadian market outdoors Canada “if that sale would cause or worsen a drug shortage in Canada.”
“Health Canada will not hesitate to take immediate action to address non-compliance,” the spokesperson mentioned in an emailed assertion.
What may occur subsequent with tariffs?
Trump has additionally vowed to impose tariffs on prescribed drugs from overseas international locations.
The U.S. Commerce Division final month launched a Part 232 investigation into whether or not these imports pose a nationwide safety menace — the identical course of that led to tariffs on metal and aluminum.
The division didn’t reply to questions from International Information about whether or not FDA-approved state drug importation applications would battle with that investigation or future tariffs.
An FDA spokesperson, talking on background, informed International Information in an e-mail that the company “is committed to implementing the executive orders related to drug imports.”
A majority of pharmaceutical elements utilized in medicine offered in North America originate from India and China, which means tariffs on prescribed drugs may elevate costs for People.
Regulation mentioned it’s doable Indian and Chinese language producers dealing with tariffs may additionally move these added prices to Canadian clients, however provided that these medicine are being imported from the U.S.
“Especially for generic drugs, India manufactures the majority of the drugs that are sold in the world,” he mentioned.
“If those drugs are getting directly imported from India to Canada, the U.S. tariffs would have little to no impact whatsoever on those products.”
—with recordsdata from International’s Katie Dangerfield and the Related Press
