- Researchers from Brigham and Women’s Hospital analyzed 195 patented medicines accounting for $87.9 billion of Medicare spending in 2024, comparing what Medicare pays after rebates and discounts against prices in 19 reference countries used to benchmark Trump’s proposed pricing policy.
- For about three in four drugs studied, companies would lose more US Medicare revenue by matching the lower reference-country price than they currently earn from total sales in that cheaper country combined — creating a direct financial incentive to raise prices abroad or withdraw products rather than cut US prices.
- The pattern is already showing up. Astellas Pharma secured a higher price for a new eye medicine in Japan this year, citing concerns over the US policy. Biogen is launching its postpartum depression drug Zurzuvae in only a few European countries, and Roche has said it may never introduce an unapproved breast cancer pill in its home market of Switzerland.
- Lowering Medicare prices to match reference countries would save two pilot programs $11.6 billion, but that figure drops to $3.3 billion once the 17 companies that struck separate pricing deals with the White House are exempted. Nine more drugmakers reached pricing deals with the administration in the past month, not included in this analysis.
What Happened?
The Lancet study, published Sunday, quantifies a dynamic that had been observed anecdotally: Trump’s push to tie Medicare drug prices to those in other wealthy countries creates a structural incentive for companies to protect their more lucrative US market at the expense of access elsewhere. Because US sales dwarf sales in most reference countries, the math for most drugs favors raising prices or limiting availability abroad over accepting lower US reimbursement. Astellas’ Japan price increase shows the leverage dynamic working in real time — a company using concern over the US benchmark as negotiating power with a foreign government.
Why It Matters?
This is a rare case of a policy study catching up to what pharma companies are already doing rather than predicting a future response. Biogen and Roche’s decisions to limit European launches aren’t hypothetical modeling — they’re live commercial choices being made now, ahead of any final Medicare pricing rule. For investors, the study’s exemption math is the more interesting number: two pilot programs’ Medicare savings fall from $11.6 billion to $3.3 billion once the 17 companies with separate White House deals are excluded, meaning roughly 70% of the policy’s projected US savings evaporate once side deals are accounted for. That suggests the eventual policy impact on any single company’s earnings will depend heavily on whether it negotiates an exemption, not on the headline reference-pricing framework itself. Nine additional deals in the past month, uncounted in this study, further complicate any clean read on aggregate industry impact.
What’s Next?
Watch which additional companies pursue White House pricing deals versus which absorb Medicare pressure by restricting or delaying launches elsewhere — that split will show which strategy the industry converges on. European regulators and governments are a party worth watching too, since sustained US-driven price hikes or market exits could eventually prompt a coordinated European response on drug procurement or reimbursement policy. For biotech investors, near-term launch plans in Europe and Japan are now a genuine signal of a company’s US pricing exposure, not just a market-expansion decision made independently of Washington.
Source: Bloomberg
