Last week, President Trump issued letters to 17 of the largest pharmaceutical companies, expressing dire urgency for making changes along the drug pricing front.1

These letters date back to an executive order (EO) he enacted in May that essentially proclaimed that pharma companies need to treat the United States as a most-favored nation (MFN) as it pertains to drug pricing. The EO notes that US drug prices need to be less than or equal to the drug’s lowest price in other nations, as a way of establishing fairness.

Trade tensions escalate with looming import tariffs

Trade wars featuring the United States versus all other nations have been in full swing for about six months now, and Trump has also made an effort to encourage reshoring of manufacturing. 2 Regarding pharma, there had been talks over the past few months that a possible 25% tariff might affect the sector2—Trump noted that import taxes of up to 200% could take effect in a year or year-and-a-half—until earlier this week.

In an interview with CNBC’s “Squawk Box,”3 Trump stated that these levies on pharmaceutical imports could ultimately reach up to 250%, marking a new high.

However, an important note—that does not mean this will necessarily happen, but early this morning, the Trump administration enacted tariff rates between 10% to 50% on a multitude of trading partners, reported CNBC.4

A majority of goods entering the United States will have a baseline levy of 10%.

Critics warn MFN policy could stifle innovation

Ed Schoonveld—a value and access advisor for Schoonveld Advisory, author of The Price of Global Health, and a Pharma Commerce columnist—argues that the MFN model imports restrictive foreign price controls, potentially distorting the market, discouraging innovation, and weakening the US pharmaceutical industry’s global competitiveness.

“The MFN model has been introduced as a seven-year test, only to circumvent proper decision-making in Congress,” he wrote in Pharma Commerce’s June issue.5 It may make sense for the Centers for Medicare & Medicaid Services (CMS) to have latitude in testing new approaches, but a seven-year drug price control scheme is not reversible, and in my opinion, is likely to do irreparable damage to drug innovation.”

Pharma companies accelerate reshoring investments

On the tariff front, many may be aware that companies like Regeneron, Roche, Merck, and Thermo Fisher have already been working to reshore manufacturing to the United States in an effort to sidestep steep tariffs. This includes a combined $53 billion by Regeneron and Roche to improve their manufacturing and R&D infrastructure, $1 billion by Merck, and $2 billion by Thermo Fisher.6

Beyond those companies, Piramal Pharma Limited also revealed that it would be investing $90 million toward growing two of the company’s plants located in the United States: Lexington, KY, and Riverview, MI.6 Along with that, AstraZeneca—one of the companies that received Trump’s letters—reported that it plans to invest $50 billion by 2030 in US-based drug manufacturing and R&D, marking its largest single manufacturing investment globally.7 The announcement is headlined by a new state-of-the-art facility in Virginia that will produce active pharmaceutical ingredients (APIs) for weight management and metabolic treatments, leveraging AI, automation, and data analytics.

AstraZeneca CEO Pascal Soriot emphasized the company’s long-term vision and commitment to US biopharmaceutical innovation, stating that “today’s announcement underpins our belief in America’s innovation in biopharmaceuticals and our commitment to the millions of patients who need our medicines in America and globally. It will also support our ambition to reach $80 billion in revenue by 2030. I look forward to partnering with Governor Youngkin and his team to work on our largest single manufacturing investment ever. It reflects the Commonwealth of Virginia’s desire to create highly-skilled jobs in science and technology, and will strengthen the country’s domestic supply chain for medicines.”

However, the reshoring process could take years without existing infrastructure in place. While the benefits are clear, building out the necessary infrastructure for domestic production can take years if it’s not already in the works.

References

1. Saraceno N. President Trump Issues Letters to 17 Major Pharma Companies Demanding Action on Most-Favored-Nation Order. Pharmaceutical Commerce. August 1, 2025. Accessed August 7, 2025. https://www.pharmaceuticalcommerce.com/view/trump--mfn-drug-pricing-17-big-pharma-companies-spurs-global-industry-response

2. Saraceno N. As Trump Pharma Tariff Deadline Looms, Here's How the Sector Got Here. Pharmaceutical Commerce. July 31, 2025. Accessed August 7, 2025. https://www.pharmaceuticalcommerce.com/view/trump-pharma-tariff-deadline-looms-how-sector-got-here

3. Constantino AK. Trump Says Pharma Tariffs Could Eventually Reach Up to 250%. CNBC. August 5, 2025. Accessed August 7, 2025. https://www.cnbc.com/2025/08/05/trump-says-pharma-tariffs-could-eventually-reach-up-to-250percent.html

4. Meredith S. ConfusedaAnd Concerned, CEOs Get to Grips With Trump’s New Tariff Regime. CNBC. August 7, 2025. Accessed August 7, 2025. https://www.cnbc.com/2025/08/07/confused-and-concerned-ceos-on-trumps-new-tariff-regime.html

5. Schoonveld E. Reviewing the Most-Favored Nation Model. Pharmaceutical Commerce. June 13, 2025. Accessed August 7, 2025. https://www.pharmaceuticalcommerce.com/view/reviewing-the-most-favored-nation-model

6. Saraceno N. Hikma Commits $1 Billion to Boost US Drug Manufacturing and R&D Services by 2030. Pharmaceutical Commerce. July 3, 2025. Accessed August 7, 2025. https://www.pharmaceuticalcommerce.com/view/hikma-commits-1-billion-us-drug-manufacturing-2030

7. Saraceno N. AstraZeneca Commits $50 Billion to US Manufacturing and R&D Efforts by 2030. Pharmaceutical Commerce. July 22, 2025. Accessed August 7, 2025. https://www.pharmaceuticalcommerce.com/view/astrazeneca-commits-50-billion-us-manufacturing-research-development-2030