Trump’s New Pharma Order May Push India to Raise Drug Prices; Stocks Slide Amid Margin Concerns

US President Donald Trump’s new executive order on drug pricing could put increasing pressure on India to raise drug prices, including in developing markets. This order requires pharmaceutical companies to align US drug costs with the lowest costs abroad through a “most favoured nation” (MFN) policy. Trump’s policy will mean that the US will pay the same price as the country with the lowest drug prices in the world, potentially reducing prescription drug costs by 30-80% in the US. However, this will lead to higher prices globally to equalize the costs, which could negatively affect lower-cost markets like India.

Trump’s announcement addresses concerns over the much higher prices of prescription drugs in the US compared to other nations, often five to ten times higher for the same drug manufactured by the same company. While the executive order will likely benefit American patients by lowering prices, it is expected to prompt pharmaceutical giants to push for price increases in developing countries like India, where drug prices are relatively lower. India’s generic drug industry has been a longstanding source of affordable medicines not only for India but also for the US and the UK. However, large pharma companies in developed nations have long criticized India’s weak intellectual property rights, arguing that they make the market uncompetitive.

Trump’s order also follows the US placing India’s patent regime on its “Priority Watch List” for intellectual property rights (IPR), indicating concerns about drug manufacturing processes. As a result, pharmaceutical companies are expected to increase pressure on India to raise drug prices in order to align with global trends, particularly as low-cost markets like India will have a major influence on prices in lucrative markets like the US. Ajay Srivastava, head of the think tank Global Trade and Research Initiative (GTRI), sees Trump’s MFN policy as a warning sign for India. The policy suggests that pharmaceutical companies in the West, facing stricter price controls, will intensify efforts to raise prices in India and other markets.

Srivastava emphasizes that India must adopt a strategic response to these pressures, noting that the battleground has shifted from legal disputes to trade negotiations. India is urged to maintain its stance on intellectual property rights (IPR) and ensure that its patent regime remains aligned with the interests of public health, affordable access to medicines, and preventing monopolistic practices. India’s pharmaceutical laws comply with the WTO’s TRIPS Agreement, but it has resisted adopting “TRIPS-plus” provisions, which are additional patent protections often promoted by developed countries through Free Trade Agreements (FTAs). These provisions include data exclusivity, automatic patent term extensions, patent linkage, broader patentability criteria, and practices like evergreening, which aim to extend patent life unnecessarily.

India’s resistance to such TRIPS-plus provisions has been a point of contention with developed nations, but maintaining this stance is seen as crucial for keeping medicines affordable and accessible. As global pharmaceutical companies turn to FTAs to extract stronger intellectual property rights commitments, India is urged to stand firm on its patent policies to safeguard public health and prevent price hikes.