Op-ed: Canada Must Respond to U.S. Policy by Increasing Our Support for Pharmaceutical Innovation

February 13, 2026

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As published in the Hill Times, an English-only outlet.

Despite an endless slew of headlines caused by the United States administration’s drastic trade policy course changes over the past 12 months, one executive order from last May has largely flown under the radar. The White House has proposed benchmarking domestic drug prices to those of other developed countries to balance differences between U.S. and international drug prices, a move dubbed the “most-favoured-lowest price.” This proposal was repeated in recent a White House fact sheet and during a roundtable with American health executives.

The proposal may have flown under the radar, but its repercussions won’t. Canada’s pharmaceutical supply chain could be significantly disrupted, and it would be exponentially more difficult to attract pharmaceutical investment in Canada.

Contrary to most high-income countries that regulate drug prices, the U.S. largely leaves drug pricing up to market forces. As a result, list prices for brand-name medicines are significantly higher in the U.S. when compared to peer countries like Canada, regularly averaging four to five times the price.

The regulation of drug prices elsewhere is a long-standing trade policy irritant for the U.S. as it argues this asymmetry unfairly burdens Americans with the funding of global pharmaceutical innovation. Despite accounting for 38% of the GDP of high-income OECD countries, the U.S. accounts for 60% of spending on innovative medicines. On a per capita basis, the U.S. ranks far above most peer countries, spending 0.78% of GDP per capita on innovative medicines, compared to just 0.34% in the European Union and 0.32% in Canada.

The most-favoured-lowest price theoretically rectifies the spending imbalance by pressuring foreign governments to increase their drug prices, thus allowing drug manufacturers to lower their prices in the U.S. market without taking major losses.

Canada, with our relatively low per capita spending on pharmaceuticals, is a natural target, but formulating an appropriate response to the U.S. policy is far from straightforward. To start, this issue will be addressed in the context of our broader trade negotiations with our largest trade partner. Resisting U.S. demands here could result in consequences elsewhere, and vice-versa. We can therefore expect this issue to be included in the negotiations for the renewal of the Canada-U.S.-Mexico Agreement.

Changing our own drug system to better encourage investment and innovation is not an easy task. It is not well understood that our underfunding of pharmaceutical innovation has real and negative consequences for Canadians in the form of less choice and longer wait times for new medicines. Currently, Canadian patients on public plans wait more than two years on average to access new and potentially life-saving treatments — some of the longest wait times in the developed world—whereas patients in France and Germany wait less than a month. There is an opportunity to bolster funding for patient access to pharmaceuticals, while simultaneously addressing U.S. concerns for more balance. This parallels the U.S. push for so-called rebalancing around NATO, trade, and many other policy areas. 

The executive order notes that any policy or practice judged discriminatory against U.S. interests, or that forces them to pay a disproportionate amount for global pharmaceutical innovation, could fall under the magnifying lens. Beyond pure price regulation, this could encompass research and development funding, intellectual property (IP) protections, and the speed with which regulators and public insurance plans approve new drugs and make them available to patients.

These are areas where Canada has known shortcomings and where broad consensus can be achieved, avoiding endless and divisive debates. Aligning Canadian IP rules with the U.S. and EU, creating a fund for new medicines, and improving the notoriously long timelines for approving new medicines and making them available to patients on public plans would effectively increase our funding of pharmaceutical innovation and respond to U.S. concerns.

Canada’s health system and innovative medicines sector are symbols of national identity and pride that we need to maintain and strengthen — but Canada could benefit from self-reflection on a question of encouraging more investment and innovation domestically. Though difficult questions may arise from the exercise, we should focus on how to make gains in our own economic imperatives in this trade war without jeopardizing pharmaceutical supply chains and patient access.

Liam MacDonald, Director, Policy and Government Relations, Canadian Chamber of Commerce

Visit the Life Sciences Council to learn more about the Canadian Chamber’s advocacy.