Trump Administration Readies New Global Drug Pricing Probe Under Section 301
Washington, Oct. 22 (Foxton News) – The administration of President Donald Trump is moving ahead with preparations for a new investigation into global prescription-drug pricing practices among the United States’ trading partners, the Financial Times reported on Wednesday, citing sources close to the matter. The probe, if launched, would set the stage for possible fresh tariffs and trade enforcement actions under the authority of Section 301 of the Trade Act of 1974.
According to the report, the investigation will examine whether U.S. trading partners are paying significantly less for prescription medicines than American consumers — in effect, whether the United States is subsidizing global drug-cost burdens by shouldering a disproportionate share of the expense. U.S. patients already pay among the highest prices for branded drugs, often nearly three times more than in other developed nations.
The White House did not immediately respond to a request for comment.
A Policy Rooted in Economic Nationalism
The probe builds on a wider strategy by the Trump administration to reshape how drug prices are set, paid, and regulated — both domestically and abroad. In recent months, President Trump has made lowering U.S. drug costs a top-line priority. He has repeatedly accused other countries of “freeloading” on American innovation by paying far less for the same medications that U.S. patients purchase at steep premiums.
In late September, the President threatened to impose a 100% tariff on imports of branded or patented pharmaceutical products — unless the pharmaceutical company in question was building a manufacturing plant in the United States. Though the administration has not yet followed through on the threat, it reflects a broader attempt to use trade leverage to reform healthcare pricing.
Earlier this year, Trump sent letters to the leaders of 17 major pharmaceutical companies, demanding that they slash U.S. prescription drug prices to match those paid abroad. It was a direct challenge to the existing global pharmaceutical pricing model, signaling that the U.S. would no longer accept being the world’s highest-paying customer without consequences.
Inside the Coming Section 301 Probe
The forthcoming investigation will reportedly be conducted under Section 301 of the Trade Act of 1974, which provides the U.S. government with broad authority to investigate and respond to foreign trade practices it deems unfair or discriminatory. Historically used in trade disputes over intellectual property and tariffs, Section 301 could now be applied to healthcare and pharmaceutical pricing — a first for the administration.
The investigation is expected to examine the pricing structures for prescription drugs in countries with which the U.S. maintains trade relationships. Analysts believe the probe will focus on whether drugmakers accept significantly lower payments from foreign governments compared to what they charge in the U.S., and whether those foreign policies unfairly shift the financial burden onto American patients.
Should the investigation conclude that these practices are detrimental to U.S. commerce or consumers, it could pave the way for retaliatory tariffs, import restrictions, or other measures targeting specific countries or pharmaceutical categories.
The Price Disparity
The core grievance fueling the administration’s investigation is the enormous price disparity in prescription drugs between the United States and other developed economies. Studies show that U.S. patients routinely pay more than double — and sometimes triple — what patients pay for the same drugs in countries like Germany, France, or Canada.
This is largely due to the unique structure of the U.S. healthcare system, where drug prices are determined by negotiations between pharmaceutical companies and pharmacy benefit managers, rather than being centrally negotiated by the government, as is the case in most other industrialized countries.
Still, the administration argues that American patients end up shouldering an unfair portion of global research and development (R&D) costs, while foreign governments benefit from negotiated discounts — a practice they say amounts to indirect price discrimination against the U.S.
Economic and Trade Implications
If the probe leads to actual tariffs or other trade enforcement actions, the ripple effects could be significant — impacting not only the pharmaceutical industry but also international trade relationships and consumer healthcare access.
For the Pharmaceutical Industry: Drugmakers that operate globally could face mounting pressure to reconfigure their pricing models. They may be forced to renegotiate agreements with foreign governments or rebalance how they allocate R&D recovery across global markets. There’s also concern that international price alignment may cut into the industry’s high-margin U.S. profits, which currently fund a significant share of global drug development.
For Foreign Governments: Countries with national healthcare systems that negotiate lower drug prices — such as those in the EU and Asia — could be forced into awkward policy positions. They may face the threat of U.S. trade retaliation if they do not allow drugmakers to charge higher prices, or if they do not themselves subsidize American firms through broader concessions.
For U.S. Consumers: While the goal of the probe is to lower prices for American patients, tariffs or supply-chain disruptions could potentially backfire. Tariffs on imported drugs, or on active pharmaceutical ingredients, might raise rather than lower prices, unless offset by production increases or pricing reform.
For Global Innovation: Some critics worry that a blunt-force approach to global price alignment — particularly if it leads to significant profit compression — could ultimately reduce pharmaceutical innovation. If companies are less incentivized to invest in R&D due to diminished returns, it could lead to fewer groundbreaking therapies over the long term.
The “Most Favored Nation” Framework
The Trump administration has long championed a so-called “Most Favored Nation” (MFN) pricing model, under which the U.S. would only pay what the lowest-paying developed country pays for any given drug. In May, President Trump signed an executive order directing federal agencies to pursue this strategy in drug pricing, further signaling a willingness to use global pricing benchmarks to recalibrate domestic costs.
Under the MFN model, the administration would aim to cap the price Medicare and other federal programs pay for prescription drugs at the lowest price available internationally. This policy has received pushback from both the pharmaceutical industry and foreign governments, but it continues to shape the administration’s broader approach.
The Section 301 investigation appears to be a legal and trade-based extension of this philosophy. Rather than waiting for companies to voluntarily align their prices, the administration is now seeking to use legal authority to compel change — and to impose consequences for foreign governments who, in their view, benefit unfairly from U.S. innovation and spending.
Manufacturing and National Security Concerns
In addition to price alignment, the Trump administration is also pushing to expand domestic pharmaceutical manufacturing. In September, the president’s threat of 100% tariffs was framed not only as a pricing tool, but also as a way to encourage companies to build plants and create jobs in the U.S.
The administration has frequently emphasized the need to restore domestic production capacity for essential drugs, citing the COVID-19 pandemic and global supply-chain vulnerabilities as wake-up calls. Trump’s broader trade strategy includes both lowering costs for American consumers and enhancing national self-reliance in critical sectors like healthcare and pharmaceuticals.
Thus, companies that agree to shift manufacturing to the U.S. may be rewarded with regulatory flexibility or exemptions from potential tariffs, while those that resist may find themselves subject to punitive measures.
Political and Diplomatic Fallout
The decision to launch a drug pricing probe under Section 301 will likely strain relations with major U.S. allies — particularly in Europe — where lower drug prices are often the result of decades-old national health systems that centrally negotiate with drugmakers. These systems are deeply embedded in their public policy frameworks and would be politically difficult to reform under external pressure.
In some capitals, policymakers are already bracing for demands from Washington to raise prices on essential medications — a move that would be politically controversial and potentially destabilizing in domestic markets. Diplomatic efforts may be launched to preempt or respond to the investigation, particularly if tariffs are introduced.
Meanwhile, domestic critics argue that the administration is trying to solve a systemic U.S. problem — excessive drug prices — by blaming other countries rather than addressing domestic inefficiencies. Some health policy experts say true reform would require overhauling the U.S. pharmaceutical pricing system, not just altering what foreign countries pay.
Industry Pushback Expected
The pharmaceutical industry is unlikely to accept these developments passively. Industry associations have already warned that sudden shifts in global pricing strategies could damage profitability, erode U.S. leadership in drug innovation, and make it harder to deliver breakthrough therapies.
Lobbying campaigns are likely to intensify in Washington, with drugmakers arguing that policy should be aimed at reforming middlemen like pharmacy benefit managers (PBMs) or improving pricing transparency, rather than limiting profits or threatening international markets.
Legal challenges may also emerge, particularly if tariffs or other trade restrictions are implemented based on Section 301 findings. Previous uses of the statute in other contexts — such as the U.S.–China trade war — have triggered WTO disputes and drawn criticism from legal scholars.
What Happens Next
As the Trump administration prepares to formalize the investigation, several questions remain:
- Which Countries Will Be Targeted? It’s unclear whether the probe will focus broadly on all trading partners or zero in on specific nations with particularly low drug prices.
- Will Companies Cooperate? Some pharmaceutical giants may voluntarily raise prices abroad or build domestic manufacturing to avoid penalties, while others may challenge the policy in court or attempt to negotiate carve-outs.
- How Will Foreign Governments React? Will they accede to U.S. demands or push back with their own trade measures?
- Will Consumers Benefit? Tariffs and trade battles have unpredictable effects. While the stated goal is lower prices, disruptions in supply or counter-tariffs could potentially harm American patients or increase costs.
Regardless of the outcome, this move represents a new and aggressive use of trade law to address what has long been seen as a domestic policy challenge. The Trump administration is betting that combining.
