Trump plans to reduce the price of drugs in the United States by 30-80%, affecting Indian generic drug manufacturers and multinational corporations. |Photo source: Reuters
U.S. President Donald Trump said in a weekend announcement that he would reduce the price of drugs in the U.S. at a rate of 30-80%.
The news is expected to take place on Monday, and the U.S. president also said the “favorite country” policy that could make the U.S. drug prices the lowest with any other country.
During his last term as president, Trump accepted big pharma in the United States in a similar manner. So his latest statement may not be a surprise to the latest statements from large U.S. drug manufacturers including Pfizer, Eli Lilly, Merck, etc. – although the impact becomes obvious once the exact details are revealed.
Industry insiders say the announcement could impact Indian drugmakers, a major market for U.S. drugmakers, albeit largely in the generic drug space.
Generic drugs are overdrugs similar to innovative drugs, but at much lower prices.
chain reaction
If the innovator’s drug price is reduced, some common or biosimilar drugs with similar gloss can often cost the patient. Several large Indian drugmakers sold to the United States, including Sun Pharma, Dr. Reddy’s Glenmark, Lupine, Zydus, and others.
In fact, representatives of large Indian drugmakers have been in discussions with U.S. administrators since the end of 2024 to highlight the role that Indian generic drugs play in reducing their health care costs. India’s drug exports to the United States are close to $9 billion.
The main price reduction may affect innovative companies investing in R&D, and Vishal Manchanda of the Systematix Group is observed. He said that while falling prices of innovative products could take up a small part of the market, Indian companies selling generic products in the United States will continue to own the market.
However, if innovative product prices are revised downward, companies in specialized fields may be affected to build innovative pipelines such as Sun Pharma.
“Impossible”
R uday Bhaskar, former director-general of the Pharmexcil Council, said the proposed price cuts by the United States are unlikely to have a significant impact. “While it’s too early to speak about influence, the market dynamics and pricing of drugs in the US and India will keep us from a huge impact. Our prices are already very competitive and will surpass the prices of patented drugs in multinational companies even after lowering prices,” Bhaskar told BusinessLine.
“This move is illogical and unscientific. The United States is comparable to that of other countries in terms of US dollars,” he added.
The main difference in pricing between the United States and other countries is the product registration fee charged in the United States. For example, the registration fee as part of the Universal Drug User Fee (GDUFA) is approximately $3,21,920 in the U.S. abbreviated New Drug Application (ANDA) (varies in the case of formula and API). Bhaskar explained: “In India, there are about Rs 15,000.””
Indian pricing
Another issue expressed by industry observers is that the impact of the latest U.S. moves on differential pricing strategies adopted by many multinational drugmakers when India launches innovative drugs. Companies often sell their innovative drugs on specific Indian pricing, a fraction of the cost of the U.S. or Europe. Trump also questioned the company during his earlier term how they sold at low prices in other countries and were more expensive on real estate.
Trump’s latest move to get better drug prices in the United States, even as the U.S. government is committed to reaching a trade deal with China; except for the U.S. president’s pending drug-specific tariff announcements over the next few days.
Published on May 12, 2025
