India’s $7 billion pharma exports to the US could face a major setback as President Donald Trump is set to sign an executive order aimed at slashing prescription drug prices in the United States by up to 80%.
In a post on the social media platform Truth Social, Trump said: “For many years, the world has wondered why prescription drugs and pharmaceuticals in the US were so much higher in price than they were in many other nations…”
He promised that prescription drug and pharmaceutical prices would be reduced, almost immediately, by 30% to 80%. “They will rise throughout the world in order to equalise and, for the first time in many years, bring fairness to the US. I will be instituting a most favoured nation (MFN) policy, whereby the US will pay same price as the nation that pays the lowest price anywhere in the world,” he said. As per experts, the move is likely to trigger a global price recalibration — with pharma giants intensifying pressure on lower-cost markets like India to raise their prices by tightening patent laws via trade negotiations. “While the move promises major savings for US consumers, it could face industry pushback and cause price rise in lower-cost countries,” says Saurabh Agarwal, tax partner, EY India.
India has long resisted the pressure to adopt additional patent protections pushed by developed countries via free trade agreements (FTAs). These include data exclusivity, automatic patent term extensions, patent linkage, patentability criteria, and evergreening practices. But things may change. “Trump’s MFN pricing policy should be a wake-up call. As pharma companies face tighter price controls in the West, they will redouble their efforts to raise prices in markets like India. ,” says Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI).