Trump’s Drug Price Plan Seeks Leverage With FDA Withdrawal Power

President Donald Trump’s proposal to peg US drug prices to those paid abroad includes granting the FDA legal authority to revoke drug approvals if manufacturers don’t meet pricing targets under the plan, a provision that is likely to face fierce legal resistance from industry if applied.

Trump’s executive order signed earlier this month revives his “most favored nation” policy that seeks to slash US drug costs by directing manufacturers to match prices to the lowest ones paid in other countries.

One way the administration may seek to persuade manufacturers to negotiate is through a provision that directs the FDA to review, modify, or revoke approvals for drugs that may be unsafe, ineffective, or improperly marketed if there isn’t “significant progress” toward reaching a pricing agreement.

It’s unclear what legal authority the Food and Drug Administration has to carry out the directive, which the pharmaceutical industry may perceive as a threat. The agency has the power under federal statute to remove or modify drug approvals if they’re no longer considered safe or effective, but it lacks authority to pull medicines over pricing.

“If FDA truly tried to withdraw a drug because the manufacturer refused to agree to a most favored nation price, I think they would very quickly find themselves up against opposition because it’s not clear what the legal basis would be for that,” said Rachel Turow, head of FDA regulatory practice at Skadden Arps Slate Meagher & Flom LLP.

The pharmaceutical industry has historically shown that it’s willing to push back on the US government’s efforts to lower drug prices, with its fight against the Medicare agency’s drug price negotiation program as the latest example. Drugmakers continue to argue the government violates constitutional and procedural laws, but their claims have largely been rejected by courts.

“Based on historical behavior, it doesn’t look likely that manufacturers would choose to lower their prices,” said Mariana Socal, a professor at Johns Hopkins Bloomberg School of Public Health. “There’s many questions about authority.”

The FDA’s role in drug pricing has always been minimal. The agency can encourage competition between manufacturers by allowing more generics and biosimilars to enter the market, but its main mission is to ensure drugs are safe and effective.

The US Department of Health and Human Services began sharing May 20 additional information on what the Trump administration is seeking to achieve under the order, but did not say what legal powers the government will use to implement the plan.

Legal, Procedural Issues

Pulling or modifying approvals under the order would likely trigger procedural and constitutional challenges if manufacturers viewed the agency’s decision as one based on the drug’s price, attorneys say.

The FDA can only withdraw or modify the approval of a drug if it meets certain criteria under the federal Food, Drug, and Cosmetic Act. That standard deals with safety, effectiveness, and improper marketing, but not the pricing of drugs.

“Trying to tie this into the price of the drug—which FDA has kept separate in its evaluation of new drug products and figuring out whether or not they’re going to come to market—would just violate that premise all around,” said Reshma Ramachandran, an assistant professor at Yale School of Medicine.

Legal challenges could allege the agency’s decision was arbitrary and capricious, violated the takings clause, or overstepped its other powers, attorneys say.

“It’s going to be tied into what the law says, what the actions are, and did FDA abide with the law,” Bryant Godfrey, chair of Foley Hoag LLP’s FDA practice group, said about potential challenges. “For industry, it’s another unnecessary fight that they have.”

But beyond prospective legal issues, the executive order would also need to consider the rarity of the FDA removing drugs from the market, industry watchers say.

The FDA faced scrutiny in 2023 when it pulled Makena, a drug that sought to reduce the risk of preterm birth in pregnant women, because a confirmatory study revealed its ineffectiveness. The agency also pulled in 2005 the arthritis painkiller Bextra after learning the drug increased the risk of heart problems and severe skin reactions.

The FDA is required to go through a lengthy and rigorous science-based process that includes notice to the manufacturer on the agency’s actions to withdrawal a product and an opportunity for a hearing.

“It’s not so easy to withdraw approval of a medicine if a company doesn’t go along with their request,” said Dan Troy, a former chief counsel at FDA, now managing director at Berkeley Research Group. “It would be highly irregular because by and large the approval process has been pretty insulated from political interference.”

Product Scrutiny

The FDA’s withdrawal power under the order also raises questions on how it will manage products and approve them moving forward.

The FDA oversees drugs post-approval and can leverage annual reports to probe pharmaceutical companies for new information related to the safety and effectiveness of their products.

The agency’s plan to review Covid-19 boosters is the latest example of its current agenda to scrutinize products already on the market.

“It really paints a potential picture for drug manufacturers that FDA could take a quite a wide view of what safety and efficacy is,” said Julie Tibbets, chair of Goodwin Procter LLP’s life science regulatory and compliance practice.

“One thing companies should be starting to think about is if the scrutiny were to lead to a reopening of their safety and efficacy records on which their original approvals were based, where the weaknesses may be in the data that’s emerged.”