A Discussion on Drug CostsThe Trump Administration’s Efforts to Lower Drug Prices140th

Tetsuya Tanimoto, MD.

Chairman of Accessible Railway Medical Services Tetsuikai Medical Corporation.

Director of Navitas Clinic Kawasaki

In May, the drug-pricing policy announced by the Trump administration went beyond a simple reduction in U.S. drug prices and took on the nature of a global political and economic strategy. Its impact is expected to ripple across the entire global pharmaceutical system. Behind the policy, which aims to align U.S. drug prices with those of countries whose per-capita GDP is at least 60% of that of the United States, lies a strong dissatisfaction with the notion that “the U.S. bears too great a share of the world’s drug costs,” as well as demands for “fair burden-sharing” from other nations. The Department of Health and Human Services selected target drugs in June and has begun advance notifications to pharmaceutical companies.

Awareness of the imbalance in global drug-price burdens has also intensified within the pharmaceutical industry, exemplified by Pfizer CEO Albert Bourla’s concept of a “NATO-style drug-price burden-sharing mechanism.” At a conference hosted by Goldman Sachs in June, he argued that countries should allocate a fixed share of GDP to funding innovative medicines. He criticized the current situation—where the U.S. spends 0.8% of its GDP on new drugs, compared to 0.4% in Germany, 0.3% in the U.K., and 0.5% in Italy and Spain—as allowing other countries to “free-ride.” The core idea is to apply the NATO model—where member states are expected to spend at least 2% of GDP on defense—to the field of drug pricing.

What is notable is that the Trump administration’s stance enjoys overwhelming support among U.S. citizens. In a recent survey by a group calling for pharmaceutical-industry reform, 85% of respondents felt that “drug prices are too high,” and 86% supported “candidates who pledge to lower drug prices.” The fact that immune checkpoint inhibitors and CAR-T therapies are sold in the U.S. at prices three to five times those in other countries has become not merely a policy issue but an electoral focal point.

Observing the Trump administration’s moves makes it clear that Japan must also reassess its drug-pricing system. Japan’s total annual pharmaceutical expenditure is roughly 10 trillion yen—second only to the U.S.—and drugs account for roughly 20% of total medical spending, a high level even among OECD countries. With an aging population and increasing chronic disease burden driving high pharmaceutical demand, the Japanese market remains an essential revenue source for global pharmaceutical companies.

Although “Japan’s drug prices are more tightly regulated than those of the U.S., they are not low by international standards,” remains the realistic assessment, Japan is still exempt from U.S. reference-pricing plans because its per-capita GDP is about one-third that of the U.S. However, if pharmaceutical companies have incentives to raise global prices by aligning them with those of low-price countries, Japan will not be immune to market pressures.

Moreover, future trade negotiations may place Japan’s drug-pricing system on the table. European and American companies have voiced concerns that “Japan’s price recalculation process lacks transparency” and that “innovation is not being properly valued.” Consequently, the concept of fair burden-sharing could become a source of pressure for systemic reform. Pharmaceutical companies, meanwhile, are shifting from dealing with individual national markets to adopting global strategies. Many firms are negotiating with governments over cost-sharing for pharmaceutical innovation, though concrete implementation plans remain unclear. This very lack of transparency may hold strategic significance, suggesting an intent to shape comprehensive, multinational rules.

U.S. drug-pricing policy is not simply about controlling domestic costs; it also influences the redefinition of global pricing structures. If the idea of introducing NATO-style burden-sharing to drug pricing gains traction, it will prompt a reassessment of both the ability and willingness of countries to pay for medicines. Japan, too, is entering an era that requires societal consensus on “what to pay for, and how much,” rather than the past assumptions of “cheap drugs are sufficient” or “the system will absorb the cost.” Japan must shift from merely defending its own pricing system to making strategic investments. As the world seeks fair burden-sharing in pharmaceutical costs, Japan must participate proactively—not passively—in shaping an international drug-pricing order through dynamic institutional design.