As President Donald Trump vows to bridge the drug pricing gap between the U.S. and other developed countries with his “most favored nation” (MFN) policy, Pfizer CEO Albert Bourla is calling for a U.S. government-led push to increase overall drug spending outside the U.S.
While the exact mechanism of implementing MFN to reduce drug prices in the U.S. remains unclear, Bourla proposed (PDF) that other countries should spend a certain percentage of their GDP per capita on innovative medicines.
Bourla laid out the concept Monday at the Goldman Sachs annual global healthcare conference, drawing a comparison to how members of the North Atlantic Treaty Organization (NATO) have agreed to commit 2% of their national GDP to defense spending.
The U.S. is spending about 0.8% of GDP per capita on innovative drugs within 10 years of their launch, Bourla said. That’s higher than the 0.5% by Italy and Spain, or 0.4% in Germany, while the U.K. is spending about 0.3%, he said.
“They are having, let’s say, free-riding all these years, and they want to continue that,” Bourla said. “And we had a situation that the U.S. government never stood up to them about drug prices, never, until now.”
Bourla argues that fixing specific drugs’ prices in each country would be too messy and may introduce potential loopholes that eventually beat the purpose of boosting drug spending.
A NATO-like alliance of drug prices is unlikely given Trump’s disapproval of international organizations, including NATO. But Bourla, who chairs the pharma industry lobby group Pharmaceutical Research and Manufacturers of America (PhRMA), suggested that the demand for higher international drug spending should be—and is being—made by the U.S. government.
“Every time that there were trade negotiations, it was all about steel, it was all about cars, it was all about AI—never about medicines,” he said. “This time is different.”
According to Bourla, Commerce Secretary Howard Lutnick, the U.S. Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent are including drug price discussions in trade negotiations with other countries.
“I don’t know how much passion they will continue demonstrating. But in my discussions with them, they have quite a bit. They don’t like it, and they think that the average should go up,” Bourla explained.
Through an executive order signed on May 12, the Trump administration is forcing drug companies to commit to aligning their U.S. prices with “the lowest price of a set of economic peer countries,” which have a GDP per capita of at least 60% that of the U.S.
To Bourla, reining in U.S. drug costs and increasing foreign countries’ expenditures are two sides of the same coin. In the U.S., it remains to be seen how the health department will enforce MFN, and Bourla said he doesn’t expect the industry will gain much clarity anytime soon.
The Trump administration already started a series of meetings with companies, including Pfizer, Bourla said on Monday.
“The meetings were cordial, but they were not digging into the substance yet,” Bourla said. “It is just trying to understand high-level ideas and no commitments.”
To implement MFN, the administration could involve Congress. But Bourla said his discussions with lawmakers suggest “no appetite for any legislation around that at all.”
Similarly, in a Monday presentation, Jefferies analysts flagged very low chances of MFN getting through Congress—either by being tucked in to an existing bill or as new legislation—based on past comments from Republican senators on government price-setting and drug innovation.
Another avenue for the Trump administration comes in the form of a pilot program called the Centers for Medicare and Medicaid Innovation (CMMI), which gives the health department authority to experiment with novel payment models that reduce spending while improving the quality of care.
Bourla pointed out that the government program doesn’t directly affect the commercial market. And because it’s a pilot, it couldn’t cover all Medicare Part B drugs or the entire country.
It’s also worth noting that Trump’s previous MFN attempt during his first term was struck down in court purely for procedural violations under the Administrative Procedure Act, which mandates agencies provide the typical notice and comment periods. At that time, the judge decided not to comment on the nature of the MFN policy, Jefferies analysts noted.
Nevertheless, Bourla suggested that the administration likely won’t go to the extremes with its MFN push.
“But in my discussions with them, I don’t think that they are looking to destroy the industry—let me put it that way,” Bourla said. “They are looking to find a solution.”
Industry watchers have inferred that Trump is leveraging unfavorable policies such as MFN and tariffs to coerce the biopharma industry elsewhere, such as increasing investments in the U.S.
Several large pharma companies, including Eli Lilly, Merck & Co. and Bristol Myers Squibb, have unveiled major U.S. investments planned for the next few years. But Pfizer remains an exception to that trend.
Pfizer has invested in U.S. manufacturing and will continue to do so, but risks from those Trump policies are making it difficult for the company to commit further, Bourla said.
“But I don’t think it makes sense to make announcements of future investments in an environment that is very fluid,” Bourla said. “The reality is that we are businesspeople, and the businesspeople will look at the environment.”
“Can I do more investments if there is tariffs and MFN? Probably not,” he continued. “Can I do more investments if those things are not there? Probably yes.”