Trump to cut drug prices: Will US drug savings drive up costs worldwide?

Dubai: Trump’s prescription drug order may trigger a global shift in pricing — and not necessarily for the better

A bold move by US President Donald Trump to slash the cost of prescription drugs in America has sent shockwaves through the global pharmaceutical industry — not just in stock markets, but potentially in how drugs will be priced across the world.

Trump announced his plan to sign an executive order to bring US drug prices more in line with what other countries pay — a move that instantly rattled pharmaceutical shares worldwide. The worry? That lower profits at home might push drugmakers to charge more abroad.

The impact was swift. Pharmaceutical stocks in Europe and Asia dropped sharply following the news. Major players like Novo Nordisk, AstraZeneca, and Roche lost ground even as broader markets rallied. In Japan, the pharma index posted its biggest daily drop in months, and US giants such as Pfizer, Merck, and Eli Lilly also saw early trading pressure.

The market jitters reflect deeper concerns: if the US forces companies to lower their prices — especially in massive government-backed programmes like Medicare and Medicaid — those same companies may look to recoup lost revenue by raising prices elsewhere.

Many countries currently benefit from cheaper drug prices than the US, partly because their governments negotiate directly with pharmaceutical firms or enforce price controls. If the US begins tying its prices to international benchmarks — or simply forces a cut — the companies might recalibrate global pricing models.

In other words, what’s affordable today in one country could become costlier tomorrow. And that has analysts watching closely.

"This has the potential to be very negative for the industry," said Bank Vontobel analyst Stefan Schneider, noting that many global drugmakers generate 40–60% of their revenue from US sales.

Countries without strong price controls — or with private healthcare systems — may feel the brunt of any corporate-driven price adjustments. Drugmakers could also slow down rollouts in lower-margin markets, or limit the supply of new treatments, especially if revenue is under pressure.

While details of Trump’s order are still sparse, analysts say it likely targets drug prices under Medicare and Medicaid, which together account for roughly 40% of US drug sales. A significant drop in prices for these programmes could deal a major financial blow, especially to companies highly dependent on US income.

That includes firms like Takeda, Sanofi, Novartis, and GSK, all of which generate a sizable portion of their global earnings from American consumers.

“A renewed push to lower drug prices may have an enormous impact on the sector’s revenues,” said Stephen Barker of Jefferies Japan.

Previous attempts to enforce similar rules have been struck down in court, but this time around, even the threat of price cuts has been enough to shake investor confidence.

It’s not guaranteed that drugmakers will succeed in raising prices abroad — many governments maintain tough pricing policies. But the risk is real, especially in middle-income nations where regulatory frameworks are weaker or still evolving.

At the same time, developing countries with growing healthcare needs could find themselves in a bind, potentially facing higher prices for essential medicines as companies seek to offset losses in their most lucrative market.

If the executive order leads to meaningful price cuts in the US, it might reshape global drug pricing strategies. For now, it’s a waiting game — but patients, insurers, and healthcare providers outside the US would do well to watch closely.

What helps US consumers pay less could end up costing the rest of the world more.