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 medication from these nations.
But the federal authorities and coverage consultants 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 Legislation, 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 medication over the subsequent month.
If offers aren’t reached with the drugmakers, Kennedy can be tasked with creating a brand new rule that ties the value the U.S. pays for drugs to decrease costs paid by different nations.
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“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.”
1:47Trump tariffs may elevate costs in U.S. for Canadian-made medication, analysis letter warns
The spokesperson added the assessment board receives publicly-available costs for medication offered in 11 “comparator” nations — together with Germany, the UK, Australia and Sweden — that issue into costs set in Canada.
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Regulatory businesses just like the Patented Drugs Costs Assessment Board and the pan-Canadian Pharmaceutical Alliance, which negotiates costs with drugmakers on behalf of provincial, territorial and federal medical insurance plans, are typically why drug prices in Canada are decrease than the U.S., consultants say. Dozens of different nations have related nationwide regulators.
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In keeping with consultants who spoke with the Related Press after Trump’s announcement, the U.S. drug market principally operates as a fragmented system the place corporations negotiate with particular person insurers or pharmacy profit managers, generally referred to as PBMs.
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In nations with single regulatory businesses, a drug firm can lose out on income 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 knowledge, that costs within the U.S. had been 2.78 occasions greater than these in 33 comparable nations throughout all medication. That features Canada, the place drug costs had been simply 44 per cent of U.S. costs, in line with the report.
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Trump additionally threatened pharmaceutical corporations 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.
Legislation mentioned pharmaceutical corporations 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.”
2:03Health Canada guarantees to safeguard prescription drug provide as Florida’s FDA approval raises fears
Canada additionally doesn’t have the manufacturing capability to satisfy mass imports to the U.S. whereas additionally fulfilling home orders, Legislation mentioned.
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Particular person states have sought to supply cheaper medication from Canada for many years.
In 2024, Florida grew to become the primary state to get a drug importation program authorised by the U.S. Meals and Drug Administration (FDA) beneath federal regulation.
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Greater than a 12 months later, nonetheless, this system has but to start and no medication have been imported to Florida from Canada.
Beneath federal necessities, state officers should first take a look at the medication to verify they’re genuine and relabel them in order that they adjust to U.S. requirements.
Trump in April signed an govt order on reducing 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 authorised by the FDA quickly, and different states have submitted functions as nicely.
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 for the reason that Florida program was authorised.
A spokesperson mentioned the division has reminded drugmakers and exporters of its obligations beneath Canada’s Meals and Drug Rules, which prohibits the sale of sure medication meant for the Canadian market exterior Canada “if that sale would cause or worsen a drug shortage in Canada.”
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What may occur subsequent with tariffs?
Trump has additionally vowed to impose tariffs on prescribed drugs from overseas nations.
The U.S. Commerce Division final month launched a Part 232 investigation into whether or not these imports pose a nationwide safety risk — the identical course of that led to tariffs on metal and aluminum.
5:01How tariffs may elevate drug costs in Canada
A majority of pharmaceutical elements utilized in medication offered in North America originate from India and China, that means tariffs on prescribed drugs may elevate costs for People.
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Legislation mentioned it’s potential Indian and Chinese language producers dealing with tariffs may additionally go these added prices to Canadian prospects, however provided that these medication 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 information from International’s Katie Dangerfield and the Related Press
