Why should Americans pay more for the same pharmaceuticals and prescription drugs than other countries?

As Congress returns from recess this September to face another season of predictable political gridlock, pharmaceutical pricing stands out as one of the few issues where bipartisan cooperation remains possible. While lawmakers will inevitably clash over appropriations, the Epstein files, and immigration, the crushing burden of drug costs affects Americans of every walk of life, in every congressional district, and across party lines. As someone who has spent years working on international economic policy, I’ve watched with growing concern as America’s pharmaceutical pricing dysfunction damages both our domestic competitiveness and our global standing.

Our pharmaceutical pricing crisis represents a textbook case of market failure—one that demands both economic rigor and policy pragmatism to solve. While political theater dominates healthcare debates, a careful analysis of the Trump administration’s Most Favored Nation (MFN) proposal reveals both its potential and its limitations, offering a foundation for bipartisan reform.

Americans pay substantially more for identical medications than patients in comparable countries. Every time American families have to choose between medications and rent payments, it is a demonstration of the country’s inability to manage basic market coordination that our allies have mastered. 

German statutory health insurance, the UK’s NICE evaluations, and Japan’s biennial repricing may not be perfect, but all represent policy tools that achieve better outcomes at lower costs. Meanwhile, pharmaceutical companies treat our market as their primary profit center while offering steep discounts elsewhere.

This represents a massive failure where Americans effectively subsidize global pharmaceutical development while other nations benefit from coordinated purchasing power and rational pricing mechanisms. This is not only unfair but also economically irrational, as it undermines American competitiveness by forcing businesses to contend with healthcare costs that their international rivals don’t face.

The Trump administration’s approach to solving this challenge by tying US government payments to international price benchmarks represents more than domestic cost control. If implemented correctly, it could be the tool that helps restore American leadership in pharmaceutical markets.

By establishing price ceilings based on comparable economies, MFN forces pharmaceutical companies to justify their pricing strategies globally rather than exploiting American market failures. This creates “yardstick competition,” in which international benchmarks discipline domestic markets. More importantly, it positions America as a coordinator rather than a passive victim of pharmaceutical price discrimination.

However, effective implementation requires sophisticated policy design that thus far seems lacking in the administration’s approach. We must select appropriate benchmarks carefully, coordinate with international partners to prevent companies from simply raising global prices, and build enforcement mechanisms robust enough to withstand industry countermeasures.

The real opportunity lies in combining MFN’s international benchmarking with complementary domestic reforms. This means strengthening Medicare’s negotiation authority under the Inflation Reduction Act while extending similar capabilities to other government programs and potentially private insurers.

A comprehensive approach requires three key components. First, international price coordination: MFN provides a foundation, but we need mechanisms to coordinate with international partners. This requires diplomatic engagement—treating pharmaceutical pricing as the international economic issue it has become. Germany, Japan, and the UK all benefit when America stops subsidizing global pharmaceutical development through inflated prices.

Second, domestic market reforms: beyond government purchasing, we need stronger competition policy enforcement to address anti-competitive practices, such as pay-for-delay agreements, abuse of citizen petitions, and product hopping strategies that artificially extend monopolies.

Third, preserving innovation incentives: any pricing reform must maintain incentives for genuine pharmaceutical innovation. This means distinguishing between breakthrough therapies that deserve appropriate compensation and minor modifications designed primarily to extend patent protection.

The greatest barrier isn’t policy complexity—it’s our own partisan paralysis and the pharmaceutical industry’s successful campaign to fragment American policy debates while maintaining unified global strategies. The industry funds research that muddies economic analysis, supports political allies who conflate pricing reform with innovation threats, and deflects blame toward other players, most notably pharmacy benefit managers.

This represents a classic case of concentrated interests defeating diffuse ones, but it also reflects deeper problems with American policy capacity. Our international competitors manage pharmaceutical pricing through coordinated government action, while we remain paralyzed by industry lobbying and partisan positioning.

Breaking this dynamic also requires recognizing pharmaceutical pricing as fundamentally an international economic issue, one that needs to be embedded in broader economic statecraft. Small businesses, state governments, and individual families all have stakes in restoring American competitiveness through rational healthcare costs. Building coalitions around these shared interests could overcome industry resistance.

The MFN proposal, if aligned with a broader set of initiatives, provides a foundation for more comprehensive pharmaceutical market coordination that serves American economic interests while preserving incentives for innovation. Success, if we are to achieve it, will require compromise all around.

For the Trump administration, for example, it means acknowledging that effective economic statecraft policy requires coordination, not just isolation.

For the pharmaceutical industry, it requires an end to shifting blame and responsibility to other players in our healthcare system and moving beyond domestic political theater to face international economic realities.

For a Congress hard-pressed to find bipartisan common ground, it means building frameworks that anticipate industry responses while maintaining competitive markets and demonstrating that America can manage complex challenges as effectively as our competitors.

The opportunity exists for pragmatic reform that restores American global economic leadership while delivering concrete benefits to American families. Whether we seize it depends on recognizing that pharmaceutical pricing represents a test of our broader capacity for policy effectiveness and international coordination.