There is a law of political economy that no government will admit to writing: a price cut in one capital must be recovered in another. On September 18, in the Oval Office, Donald Trump announced that all 50 American states would join his administration’s drive to shrink prescription drug costs, with every state Medicaid program for low-income Americans gaining access to prices matched to the lowest paid by other developed nations.

We went from paying the highest drug prices in the world to paying the lowest drug prices in the world

That was Trump’s description of the policy’s intent. His administration has struck agreements with 26 large pharmaceutical companies, pegging what America pays to a basket of 19 reference countries spanning Europe, Canada, Australia, Japan and South Korea. For decades the United States stood alone at the top of the world’s price table, a kind of golden colony of the pharmaceutical industry, where brand-name medicine costs far more than anywhere else. Canada, where brand-name drugs are on average significantly cheaper, sits inside the reference basket. And that, Canadian experts say, is where the arithmetic becomes a threat.

The doctrine of the favoured nation

The mechanism bears a name borrowed from the diplomacy of trade: most favoured nation pricing, or MFN. The idea is not new, only new to Washington. According to Dr. Thomas Hwang, an assistant professor at Brigham and Women’s Hospital in Boston, MFN arrangements are already common across Canada and widely used in Europe to restrain drug spending. The grand name, experts note, is misleading — it is not about favouring anyone.

“It basically says that the United States wishes to get the price that’s being offered to similarly sized countries and similarly wealthy countries,” Hwang said. Canada is bundled with those similar countries on the basis of net pricing deals, said Mina Tadrous, an associate professor at the University of Toronto’s pharmacy faculty who evaluates drug policy. The bundle is the point: to be in it is to be a lever, whether one wishes it or not.

What Ottawa should fear

Tadrous is careful with the prophecy. The American policy does not mean Canadian prices rise automatically. But a multinational company, watching its American revenue squeezed, has options, and Canada is one of them: demand higher prices north of the border, trim the confidential discounts it offers, or simply delay launching new medicines in a market that suddenly pays less by comparison. Postponement is cheaper than confrontation; a patient waiting for a drug that never quite arrives files no lawsuit.

The industry’s Canadian voice, Innovative Medicines Canada, argues that MFN pricing in the U.S. threatens to disrupt access to existing medicines, slow the arrival of new ones and undermine confidence in the Canadian pharmaceutical market altogether.

For Canadians waiting for a new cancer therapy, a rare disease treatment, or first-in-class medicine, these aren’t abstract policy debates. The changes could have serious consequences for them and their families

In Toronto, the policy debate ends in a waiting room. Dr. Nav Persaud, a family physician at St. Michael’s Hospital, describes what the price of medicine already looks like from below.

“People are paying a lot for food and for rent, and they don’t have money left over at the end of the month to pay for medicines and medicines end up getting sacrificed,” Persaud said. “I see patients who do not take recommended medicines because of the cost. That happens every day.”

The redacted pages

The machinery of these agreements would have stayed invisible but for a lawsuit. Public Citizen, a U.S. consumer advocacy group, sued to obtain copies of the Pfizer and Eli Lilly agreements and posted them, heavily blacked out. Even so, the group said, the documents “reveal concerning terms that will help facilitate pharma companies charging more for drugs abroad or discontinuing supplying drugs in other countries so that they can continue to charge U.S. customers high prices.”

Two details slipped past the censor’s marker. One is a carve-out for Eli Lilly’s weight-loss blockbuster Zepbound — the GLP-1 drugs, it emerged, will not be subject to MFN pricing at all. “That carveout is new from what the administration has told us in the months leading up to this as well what even the companies have disclosed,” Hwang said. The other is a Pfizer provision suggesting the company agreed to share revenue with the U.S. government if it raises prices outside the United States. Read that clause again: Washington would take a cut from price increases borne by Canadians, Europeans, Japanese.

Hwang sees design, not accident. “In the executive order that President Trump released last year, it’s not sufficient for the administration for prices to be lower in the U.S.,” he said. “There’s also a deep desire at the highest levels of the executive to raise prices outside the U.S, too.” There is precedent: under the United Kingdom’s pharmaceutical trade agreement with Washington, Britain committed to increasing its spending on medicines as a share of GDP.

What the models say, and what nobody knows

Last week Hwang and his co-authors published a modelling study of the proposed MFN policy in the medical journal The Lancet. Their conclusion runs in two directions at once: MFN pricing for brand-name medicines could decrease net Medicare spending, but the change “could have unintended effects on prices and access to medicines in referenced countries.” Hwang said the study was driven by a wish for an independent assessment of American savings and, “secondly and equally as importantly,” of the potential impacts beyond America’s borders.

Beyond those borders, much remains a black box. The negotiated prices and key financial terms are heavily redacted, so no outsider can judge the value of the deals for taxpayers or companies. Confidential discounts and rebates, in the U.S. and elsewhere, were not consistently or reliably available, Hwang added. As the Canadian question was put to CBC: “The huge asterisks around all of this is like are we [Canada] actually the lowest prices? How good are the deals we’re getting? And until we know that, we don’t know what the impacts are going to be on Canadians.”

The empires of health have always collected their tribute quietly, in ledgers no patient ever sees. What has changed is that one government now declares the tribute an injustice — and proposes that someone else’s patients should pay it instead.