Trump's drug price cut plan may trigger global price hike, pressure on India, warns think tank

US President Donald Trump's proposed executive order to slash prescription drug prices by 30-80% could lead to a global price recalibration, with pharmaceutical companies pushing lower-cost markets like India to raise prices, according to the Global Trade Research Initiative (GTRI).

The US plan, centred on a "most-favoured nation" (MFN) pricing policy, seeks to tie drug prices to the lowest rates paid by other developed nations.

GTRI Founder Ajay Srivastava warned that this could push pharmaceutical giants to offset losses by targeting markets like India, where prices are significantly lower.

"It is likely to trigger a global price recalibration, with pharmaceutical giants intensifying pressure on lower-cost markets like India to raise their prices by tightening patent laws through trade negotiations," Srivastava said. "India must respond with strategic clarity and unyielding resolve."

India, a global leader in generic drug production, supplies affordable medicines to much of the developing world.

Its patent regime, compliant with the World Trade Organization’s TRIPS agreement, rejects practices like data exclusivity and evergreening, ensuring faster access to low-cost generics.

However, developed nations often push for TRIPS-plus provisions in free trade agreements (FTAs), including patent term extensions and patentability criteria, which could undermine India’s model.

India has long resisted TRIPS-plus provisions in FTAs, safeguarding its ability to produce affordable drugs.

"From antiretrovirals for HIV to affordable cancer therapies, India's pharmaceutical industry is vital to global health," Srivastava said. "The world depends on India's generics. Preserving this model is not only in India's interest - it is a moral and global necessity."

Saurabh Agarwal, Tax Partner, EY, said that while the move promises major savings for American consumers, it could face industry pushback and cause price increases in lower-cost countries as manufacturers seek to recover losses and R&D costs from these countries.