Global trade and health policy collided this week as U.S. President Donald Trump intensified his push for drug pricing reform through sweeping tariffs and international price negotiations—a move that’s rattling Canadian policymakers and industry leaders.
Trump’s Tariff Threats and MFN Pricing Push Put Pressure on Canada-U.S. Trade and Pharma Sector
Trump announced that tariffs on imported pharmaceuticals will start “small” and rise to 150% within 18 months, eventually hitting 250% to boost U.S. drug production. Although many companies have pledged large-scale investments to shift drug production in the U.S., Trump announced the “most favoured nation” (MFN) pricing plan, urging pharmaceutical companies to match U.S. drug prices to the prices paid by other developed nations. In a letter sent to 17 major drug manufacturers, Trump threatened that the U.S. will maximize “every tool in our arsenal” to combat “abusive drug pricing practices”.
According to a Reuters article, Trump has also asked pharmaceutical companies to raise prices in Europe and other countries in exchange for lower costs in the U.S., with his administration pledging to back them in international negotiations. Eli Lilly chief David Ricks cautioned against the potential impact of matching U.S. prices to international drug costs, and promoted the rebalancing of prices between the U.S. and the European Union to account for risks and research and development costs.
Lilly is considering its pricing for the new weight loss drug orforglipron and the ongoing weight loss market competition against Novo Nordisk during the second-quarter earnings call yesterday. Ricks confirmed that Lilly will provide “consumer-level pricing” for the new drug, citing coverage gaps for obesity.
Meanwhile, Canada is bracing for broader trade fallout after Trump imposed 35% tariffs on Canadian exports not covered by the Canada-U.S.-Mexico Agreement (CUSMA). Prime Minister Mark Carney called the tariffs “disappointing” but reaffirmed Canada’s commitment to the trade agreement. Minister of Intergovernmental Affairs Dominic LeBlanc said a meeting between Carney and Trump is expected in the coming days, as Canada seeks a deal to eliminate tariffs while protecting jobs on both sides of the border. Despite the recent 35% tariffs, LeBlanc described negotiations as “constructive and cordial” and emphasized optimism about reaching a mutually beneficial agreement.
Provincial leaders are split: Saskatchewan Premier Scott Moe responded to the tariff hikes by emphasizing that 95% of the province’s exports to the U.S. remain tariff-free under CUSMA, giving Canada a relative trade advantage. He urged the federal government to avoid retaliation and instead adopt Saskatchewan’s economic plan to boost infrastructure and remove federal barriers to growth, while Nova Scotia Premier Tim Houston issued a statement addressing the failure to reach a Canada-U.S. trade deal and the resulting American tariff increase. He emphasized support for retaliatory measures if necessary and highlighted efforts to diversify trade, remove interprovincial barriers, and boost local economic self-reliance.
NDP Leader Don Davies criticized Carney for missing the August 1 U.S. trade deal deadline, calling his concessions to Trump ineffective as tariffs continue to harm Canadian jobs and industries. The New Democrats urged the government to take a firmer stance by boosting domestic manufacturing, protecting workers, and accelerating trade diversification.
A week after the announcement on the “most favoured nation” (MFN) pricing plan, Pfizer CEO Albert Bourla confirmed that he had “extremely productive” conversations with President Donald Trump to reduce drug prices in the United States.
Although Bourla was unable to provide more concrete details, the Pfizer chief admitted that Trump’s letter “asks a lot from us”, but he appreciated the administration’s openness to discuss solutions. Moreover, Bourla said that many major pharmaceutical companies are willing to reduce drug prices through direct-to-consumer drug sales, with Pfizer and Bristol Myers Squibb offering lower rates for online purchases of Eliquis.
Healthcare Groups Press for 2025 Budget Investments as Debt Concerns Spark Calls for Cuts
The Canadian Federation of Nurses Unions urged the federal government to prioritize healthcare in the 2025 fall budget by increasing Canada Health Transfers and funding pharmacare and nurse retention initiatives. The group emphasized that urgent federal investment is needed to address staffing shortages, enhance patient care, and strengthen the public health system’s contribution to the economy.
The Royal College of Physicians and Surgeons of Canada also called on the federal government to address Canada’s health workforce crisis in its 2025 budget by improving access to primary and specialty care, particularly in rural, remote, and Indigenous communities. Its recommendations also emphasize supporting internationally trained physicians and developing a coordinated national action plan to improve care delivery and workforce sustainability.
At the same time, health advocates are pressing for a rethink of pharmacare implementation after early rollouts in Manitoba and Prince Edward Island revealed new gaps in medication access, leading to the federal government pausing further expansions.
In an opinion article in The Hill Times, the senior vice-president of pharmacy affairs and strategic engagement with the Neighbourhood Pharmacy Association of Canada, Shelita Dattani, noted concerns about the disruption of existing coverage, with public polls indicating that most Canadians do not want the new federal program to interfere with their private plans. Currently, 75% of Canadians receive prescription drug coverage through their employers.
Meanwhile, the Canadian Health Coalition emphasized that Canada is unique among healthcare systems in lacking drug coverage outside hospitals. The coalition claimed that one in five Canadians do not take prescribed medications due to this fragmented system, urging the federal government to provide clarity on pharmacare plans.
Fiscal experts, however, are urging caution. The Montreal Economic Institute (MEI) urged the federal government to rein in spending and reconsider costly new programs — particularly in health care — amid a projected $92-billion federal deficit in 2025–2026 amid economic stagnation. The research group argued that rolling back recent initiatives could yield substantial savings, citing $13 billion over five years for the federal dental plan and $13.4 billion for the pharmacare program by 2027–28, pointing out that healthcare is primarily a provincial responsibility.
In its recommendations, the MEI called for a leaner federal bureaucracy, regulatory reform to spur economic growth, and a review of major spending commitments. It stressed that reducing program costs would help restore fiscal stability and better position Canada to withstand future economic shocks.
The call comes as the C.D. Howe Institute drew parallels between current post-COVID conditions and the post-2008 period, noting that while other debt ratios have improved, federal debt remains high. Both think tanks warn that without decisive action, Canada risks entering a prolonged period of weak growth and limited fiscal flexibility.
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