I. Introduction
The soaring cost of prescription drugs in the United States has long stirred public discontent and bipartisan concern. In April 2025, former President Donald J. Trump, now a leading candidate in the upcoming election cycle, signaled a renewed focus on this issue. According to a Reuters report (April 22, 2025), Trump is considering reintroducing international reference pricing (IRP) as a cost-control measure for U.S. drug prices. This policy, widely discussed during his first term and later blocked by federal courts, would benchmark U.S. drug prices against those paid in other wealthy nations like Sweden, Japan, and Canada.
At the center of this policy proposal lies a fundamental tension between public interest and private enterprise. Should the U.S. government adopt pricing benchmarks used by foreign nations, or does such a move undermine the principles of free-market capitalism that drive pharmaceutical innovation?
The consideration of IRP represents not merely a health care initiative, but a constitutional and statutory test. How far can the executive branch go in reshaping the pharmaceutical pricing structure under current law? Can it implement such a reform without new legislation? These are not just economic questions but also legal and political ones, involving the interplay between executive authority, legislative prerogative, and judicial oversight.
As Dr. Rena Conti, Associate Professor at Boston University’s Questrom School of Business, puts it: “There are thousands of approved drugs in the U.S., some of which are not covered by or have not been launched in different reference nations. Those countries can sometimes take years to negotiate drug prices. Applying their standards directly to U.S. markets raises significant regulatory, economic, and ethical concerns.”
This article explores the implications of the Trump administration’s renewed consideration of IRP by delving into the legal foundations, historical context, viewpoints from across the political spectrum, and potential long-term impacts on public policy and civil liberties.
II. Legal and Historical Background
A. Statutory and Regulatory Foundations
Several key statutory frameworks govern federal intervention in drug pricing:
- Section 1191 et seq. of the Social Security Act (42 U.S.C. §1320f), enacted as part of the Inflation Reduction Act of 2022, grants the Secretary of Health and Human Services (HHS) the authority to negotiate prices for selected high-cost drugs covered under Medicare.
- 21 U.S.C. §384 (Section 804 of the Federal Food, Drug, and Cosmetic Act) permits drug importation from Canada under strict regulatory conditions.
- 42 U.S.C. §1315a (Section 1115A of the Social Security Act) creates the Center for Medicare and Medicaid Innovation (CMMI), allowing experimental models of care delivery and payment.
The application of IRP would likely occur through CMMI, enabling the Centers for Medicare & Medicaid Services (CMS) to test new pricing models without prior Congressional approval.
B. Precedent Legal Challenges
In 2020, the Trump administration announced the “Most Favored Nation” (MFN) rule under Executive Order 13948, intending to lower Medicare Part B drug prices to match those paid in other OECD nations. However, the U.S. District Court for the District of Maryland issued an injunction in Association of Community Cancer Centers v. Azar, 509 F. Supp. 3d 482 (D. Md. 2020), citing procedural irregularities and a lack of notice-and-comment rulemaking required under the Administrative Procedure Act (APA).
The Inflation Reduction Act (IRA), signed into law by President Biden in 2022, sidestepped these issues by explicitly authorizing Medicare drug price negotiations, thereby creating a stronger statutory basis for cost control mechanisms.
C. Scholarly Interpretations
Legal scholars have interpreted the Trump-era MFN policy as an overreach of executive authority. Professor Nicholas Bagley of the University of Michigan noted in the Yale Law Journal Forum (2021) that “executive rulemaking in the health care domain must be grounded in clear congressional authorization to withstand judicial scrutiny.”
Meanwhile, others argue that the escalating cost of drugs justifies assertive executive action. As Professor Rachel Sachs of Washington University states in Health Affairs (2022), “The Inflation Reduction Act provides a constitutionally sound and economically justified framework for drug price reform. IRP, implemented correctly, could be aligned with that authority.”
III. Case Status and Legal Proceedings
As of April 2025, there is no formal litigation surrounding Trump’s proposed IRP model. However, sources confirm that CMS is exploring a pilot program through CMMI. Any regulatory implementation would need to conform to APA requirements, including notice-and-comment procedures.
The pharmaceutical industry, led by lobbying groups such as PhRMA (Pharmaceutical Research and Manufacturers of America), has already expressed deep concern. Industry insiders reportedly described IRP as “the biggest existential threat to the industry and U.S. biosciences innovation.”
Should the Trump administration move forward, the most probable legal challenges would involve claims of improper delegation of legislative power, violations of the Takings Clause of the Fifth Amendment, and APA noncompliance.
Legal observers anticipate swift filings in federal courts. According to Robert Field, Professor of Law and Public Health at Drexel University, “If the administration does not construct an airtight administrative record, legal opponents will use that vulnerability to obtain injunctions.”
IV. Viewpoints and Commentary
A. Progressive / Liberal Perspectives
From a liberal perspective, the high cost of drugs is a moral and public health failure. Groups such as Public Citizen and Families USA support IRP as a tool to alleviate the burden on working-class families.
Senator Bernie Sanders (I-VT) recently remarked, “It is a national disgrace that Americans pay the highest prices in the world for the medicines they need to stay alive. International reference pricing is not radical; it’s common sense.”
Economists like Dean Baker of the Center for Economic and Policy Research argue that reducing monopoly pricing in pharmaceuticals would have negligible effects on innovation. “The pharmaceutical industry routinely exaggerates the relationship between prices and R&D. In truth, a lot of research is publicly funded or subsidized through university partnerships,” Baker notes.
B. Conservative / Right-Leaning Perspectives
Conservative analysts warn that IRP introduces de facto price controls, a step that they argue is incompatible with the principles of market-based medicine. The Heritage Foundation argues that such models could reduce U.S. leadership in biopharmaceutical innovation.
Robert Moffit, Senior Fellow at Heritage, stated, “Importing price controls from countries with socialized medicine will discourage investment and threaten future cures.”
Similarly, the Cato Institute contends that lower prices will not address supply chain problems or regulatory barriers that also inflate costs. In their 2023 policy brief, they wrote: “The answer lies in deregulation, not more government control.”
V. Comparable or Historical Cases
A. The Most Favored Nation Model (2020)
The MFN model serves as the closest historical analogue. It targeted 50 drugs reimbursed under Medicare Part B, aiming to align prices with those in 22 developed countries. Despite its estimated $85 billion savings, the model was invalidated due to administrative failings and industry opposition.
B. The Canadian Importation Rule (2020)
Another precedent is the Trump administration’s FDA regulation allowing states to import drugs from Canada. Though technically authorized under 21 U.S.C. §384, implementation has stalled due to litigation and Canadian opposition, highlighting the challenges of international alignment in drug policy.
C. Inflation Reduction Act Implementation (2022-2025)
The IRA’s structured negotiation for 10 high-cost drugs by 2026 offers a domestic parallel. Legal scholars, including Dr. Sara Rosenbaum of George Washington University, argue it provides a blueprint for lawful and politically viable reform.
VI. Policy Implications and Forecasting
Implementing IRP will likely catalyze sweeping changes in both market behavior and regulatory practice. Short-term effects may include:
- Lower Medicare and Medicaid expenditures
- Intensified lobbying from pharmaceutical interests
- Initial litigation challenges delaying implementation
In the long term, the policy could shape the global pharmaceutical landscape. If the U.S., the world’s largest drug market, imposes IRP, other countries may recalibrate their pricing models to avoid ripple effects.
Brookings Institution scholar Dr. Louise Sheiner warns that “the risk is that drug companies raise prices abroad to maintain profit margins, potentially harming access in low-income countries.”
Conversely, the Brennan Center for Justice emphasizes the need for “equity in access and constitutional fidelity,” arguing that policies like IRP, when properly crafted, uphold the public interest without compromising legal norms.
VII. Conclusion
The Trump administration’s exploration of international reference pricing reignites a fierce debate at the intersection of health care, law, and economic policy. While it promises savings and increased access, it also poses risks to innovation, executive overreach, and global pharmaceutical pricing dynamics.
Ultimately, the initiative reflects a broader constitutional question: How should the U.S. balance free-market principles with its responsibility to ensure affordable health care for its citizens?
As Professor Nicole Huberfeld of Boston University remarks, “Healthcare policy, particularly drug pricing, is where the rubber meets the road for our most cherished values: life, liberty, and the pursuit of happiness.”
What remains to be seen is whether the courts, Congress, and the public will accept a globally benchmarked path to drug affordability — or resist it in defense of domestic innovation and sovereignty.
For Further Reading
- Brookings Institution – “The case for—and against—drug price controls in the U.S.”
https://www.brookings.edu/articles/the-case-for-and-against-drug-price-controls-in-the-u-s/ - The Heritage Foundation – “International Reference Pricing of Medicine: Bad Policy Importing Price Controls”
https://www.heritage.org/health-care-reform/report/international-reference-pricing-medicine-bad-policy-importing-price-controls - Health Affairs – “Medicare Drug Price Negotiation Under the Inflation Reduction Act: What Comes Next?”
https://www.healthaffairs.org/do/10.1377/forefront.20220913.435680/ - Cato Institute – “Pharmaceutical Price Controls and the International Reference Pricing Debate”
https://www.cato.org/blog/pharmaceutical-price-controls-international-reference-pricing-debate - Reuters – “Trump looking at cutting US drug prices to international levels, sources say”
https://www.reuters.com/business/healthcare-pharmaceuticals/trump-looking-cutting-us-drug-prices-international-levels-sources-say-2025-04-22/