Trump Drug Price Cuts Pressure Indian, US Pharma Innovation

Former U.S. President Donald Trump has announced a plan to reduce prescription drug prices in the U.S. by over 59%, reviving the 'Most Favored Nation' (MFN) pricing model aimed at aligning American drug costs with those paid by other developed nations. This policy directs the Department of Health and Human Services to reset drug prices, which could disrupt entrenched distribution systems and enhance competition from biosimilars, particularly benefiting companies in South Korea and India. Indian pharmaceutical firms may see increased R&D outsourcing and adoption of AI to manage capacity constraints, though costly initiatives in complex generics and biosimilars might slow due to financial pressures. However, critics argue that such price controls risk undermining U.S. biopharmaceutical innovation and could accelerate the industry's decline relative to global competitors like China. Chinese biotech companies might be less affected due to their cost advantages and product innovation, potentially accelerating out-licensing of drug candidates. Overall, while the policy aims to lower drug prices for American consumers, it raises concerns about potential negative impacts on pharmaceutical innovation, supply chains, and international trade dynamics.