U.S. President Donald Trump (L), accompanied by Food and Drug Administration (FDA) Commissioner Martin Makary (2nd-L), and Health and Human Services Secretary Robert F. Kennedy Jr. (C), speaks during a press conference in the Roosevelt Room of the White House on May 12, 2025, in Washington, DC. Andrew Harnik/Getty Images
Among U.S. President Donald Trump’s election promises was to bring down prices for Americans, and the latest move, targeting pharmaceuticals, could result in Canadians having to pay more.
For decades, the United States has faced elevated drug prices compared to many peer countries, and has lacked a regulatory agency like the one in Canada that keeps prices in check.
When signing a recent executive order requiring drugmakers to lower prescription drug costs in the United States, he said the rest of the world will “have to pay a little bit more” so that Americans can have cheaper pharmaceuticals.
According to Marc-André Gagnon, an associate professor with Carleton University’s School of Public Policy and Administration, Trump’s executive order could mean Canadians may see their private drug plans become more expensive.
Then there’s Trump’s comments on imposing tariffs on pharmaceuticals from other countries, which would also impact prices. With the majority of the active ingredients used in American drugs coming from India and China, and the United States being Canada’s largest supplier of pharmaceuticals, Canada could see drug shortages and higher costs.
“If there’s a tariff on the active ingredients that come from China, then that tariff may well be passed on. That could end up being reflected in U.S. drug exports to Canada,” Joel Lexchin, a professor emeritus in the School of Health Policy and Management at York University Faculty of Health, said in an interview.
The Americans have also cited national security concerns as part of their motivation for the shift. Victor Suarez, founder of the U.S.-based Blu Zone Bioscience & Supply Chain Solutions and a retired U.S. Army colonel, told The Epoch Times in a previous interview that there are national security concerns when it comes to ensuring the continuity of pharmaceuticals vital for health care.
“As [sources] shifted overseas to places like China, we see an overwhelming majority of those precursor materials coming from our number one adversary,” Suarez said.
Drug Prices in America
On May 5, Trump signed an executive order to boost domestic production of prescription drugs and to reduce the country’s dependence on foreign pharmaceutical supply chains.
A week later, he went further by signing the Most Favored Nation Drug Pricing executive order, which set a 30-day deadline for drugmakers to lower the cost of prescription drugs in the United States or face new limits in the future on what the government will pay.
Drugmakers must begin offering U.S. patients the lowest price paid for a drug in a peer country for certain high-cost prescription medications, or face consequences. Trump says this plan would lower prescription drug prices by up to 80 percent.
Some pharmaceutical companies have already pledged to increase domestic manufacturing. Eli Lilly and Company announced in February that it would be building four new drug manufacturing sites in the United States. Merck announced in April that it will invest US$1 billion to build a new plant in Delaware that will produce immunotherapy medicines used to treat different types of cancer. The same month, Swiss pharmaceutical company Roche committed US$50 billion to build new research and development sites and new and expanded manufacturing sites in several U.S. states.
A pharmacy manager works in the new Amazon pharmacy, adjacent to a fulfillment center, in Corona, Calif., on May 29, 2024. Terry Pierson/The Orange County Register via AP
A 2024 report prepared for the Department of Health and Human Services using 2022 data said that U.S. prices for all drugs (brand-name as well as generic) were 2.78 times as expensive as prices in 33 Organisation for Economic Co-operation and Development (OECD) comparison countries, like Canada, France, Germany, Italy, and the United Kingdom. U.S. prices are even higher for brand-name drugs compared to those OECD countries—3.22 times higher, even after adjusting for estimated U.S. rebates.
The United States accounted for 62.4 percent of US$989 billion of total drug sales across the OECD countries studied, but only 23.8 percent of total volume.
Factors Affecting Drug Pricing
Part of the reason for this cost difference is that the United States has a different system for pricing the drugs. Many countries have one regulatory agency that negotiates drug prices for the whole population, while the Americans have a fragmented system where companies negotiate with individual insurers.
In Canada, the Patented Medicine Prices Review Board (PMPRB) regulates the prices of patented medicines in Canada and ensures they comply with the board’s guidelines. If the board finds the price of a drug too expensive, it can open an investigation to determine whether the price is excessive. If so, it can issue an order to reduce the price as well as require the patent rights owner to offset any excess revenues received, through either a direct payment or a reduction in the price of another patented drug.
The pan-Canadian Pharmaceutical Alliance plays a similar role in that it negotiates with drug companies on behalf of provincial and federal health insurance plans to increase access to pharmaceuticals and ensure prices are lower.
A Publix Supermarket pharmacy manager counts antibiotic pills for a prescription in Miami on Aug. 7, 2007. China remains a dominant supplier of pharmaceutical ingredients. Experts warn that years of offshoring drug production have left the U.S. unable to make many life-saving medications, posing a national security risk. Joe Raedle/Getty Images
Trump has also argued that drug prices in the United States are higher because those higher prices help to fund the bulk of research and development, while other countries don’t shoulder this burden, something Trump says he wants to change.
According to the PMPRB, pharmaceutical companies in Canada are required to report the “publicly available ex-factory prices” at which they sell their products in 11 comparator countries to Canada. However, because the United States is not included in this list of comparator countries, the PMPRB price review would not be “directly affected by price changes in the U.S.,” the organization said.
However, Gagnon, whose research focuses on the political economy of the pharmaceutical sector, said Canada’s 10,000 private drug plans could see costs increase further because of Trump’s plan. He said that while public drug plans in Canada are protected against price increases because of the “negotiation of confidential rebates,” this is not the case for private drug plans.
“A lot of employers and employees might end up with a significant increase in their drug costs because of that.”
In Canada, 42 percent of prescription drugs are covered by public drug plans, 38 percent are covered by private insurers, and 20 percent are paid out-of-pocket by individuals.
Tariffs on Pharmaceuticals
Trump said in April that he was considering imposing tariffs on pharmaceuticals from other countries. The U.S. Commerce Department has launched an investigation into whether those imports pose a threat to national security, following the same process it undertook for steel and aluminum imports. Those products were slapped with a 25 percent tariff in March on national security grounds.
America’s reliance on other countries for its pharmaceuticals has been cited as a national security vulnerability by several organizations. According to the U.S.-based Regulatory Affairs Professionals Society, citing the U.S. Pharmacopeia Medicine Supply Map, 50 percent of active pharmaceutical ingredients used in products destined for the U.S. market originate from manufacturing facilities in India, with 32 percent originating from China and 10 percent from the European Union.
The Coalition for a Prosperous America, in a 2023 report, said U.S. pharmaceutical imports have skyrocketed in the last 10 years, with India and China increasingly becoming the leading U.S. source for generic pharmaceuticals, which account for 90 percent of prescriptions written in the United States. In addition, China accounts for 95 percent of imports of ibuprofen, 91 percent of imports of hydrocortisone, and 70 percent of imports of acetaminophen.
While the tariffs may prompt drug companies to move their production lines back to the United States, Gagnon said this would take a while, and in the meantime, Americans could see drug shortages and higher prices.
The U.S. Food and Drug Administration (FDA) in White Oak, Md., on June 5, 2023. Madalina Vasiliu/The Epoch Times
In 2023, Canadian pharmaceutical exports to the United States accounted for a value of over US$6.2 billion and represented 3 percent of the United States’ total drug imports.
According to research led by the University of Toronto, published in March in the journal of the American Medical Association, an estimated US$3 billion worth of pharmaceuticals used in the United States depend on Canadian manufacturing, and 25 percent tariffs on those drugs could increase costs by US$750 million. They include more than 400 different ready-for-use medications, ranging from antibiotics to drugs for mental health treatments, and among them 28 have no alternate supplier.
Meanwhile, the United States is Canada’s top source of pharmaceuticals, accounting for around 36 percent of the total value of Canada’s pharmaceutical imports (nearly US$10.4 billion) from that country, according to Statistics Canada.
Gagnon said that with many of these pharmaceuticals using ingredients sourced from other countries, drug prices would increase in Canada.
