A Quiet Claim on Canadian Pharmaceutical Revenue
Newly disclosed documents suggest that the United States government stands to collect a share of pharmaceutical revenues generated in Canada — a development that, if confirmed, would represent an extraordinary assertion of American economic reach into Canadian domestic policy.
The documents, obtained by U.S. consumer-advocacy organization Public Citizen Inc. through a freedom of information request and subsequent lawsuit, were published online this past Saturday. They consist of two agreements — both dated February 23 — signed between the U.S. Department of Health and Human Services (HHS) and two of the world’s largest pharmaceutical companies: Pfizer Inc. and Eli Lilly & Co. Both files are heavily redacted, though the sections blacked out differ between them, leaving a partial but revealing picture.
The agreements form part of a broader most-favoured-nation (MFN) drug-pricing policy that President Donald Trump has pursued with more than a dozen major pharmaceutical companies since returning to office. The policy’s stated goal is to lower drug prices for American patients by demanding that prices in other countries rise to narrow the gap with U.S. costs — effectively offloading part of the burden of American pharmaceutical spending onto foreign markets.
What the Documents Actually Say
The Lilly agreement names eight “specified countries” targeted by the arrangement: Canada, Denmark, France, Germany, Italy, Japan, Switzerland, and the United Kingdom. It includes a section titled “Return increased revenues in specified countries to American patients and taxpayers” — though the substantive content of that section is fully redacted.
The Pfizer agreement is more revealing on this point, even as it redacts the list of targeted countries. It states that, beginning January 1, “Pfizer agrees to share with HHS [redacted] portion of the net increased net revenue that Pfizer realizes from sales of the ex-U.S. version of” a list of drugs that is itself redacted. The language is unambiguous in its structure, if not its specifics: drug companies are committing to direct a share of increased foreign sales revenue to the U.S. government.
When The Globe and Mail asked HHS directly whether these agreements meant the U.S. government would receive a cut of drug sales in Canada and other countries, the department responded by pointing to a social-media post from White House spokesperson Kush Desai. Mr. Desai quoted past White House news releases stating that companies would “repatriate increased foreign revenue” — language that does not explicitly confirm government receipt of those funds, but does little to dispel the interpretation the documents invite.
Neither Pfizer nor Lilly directly addressed questions about their increased global revenues or whether Canadian prices had already been adjusted in response to these deals. A Lilly spokesperson offered only that the company was proud to provide lower prices on some products to some Americans.
Canada’s Position in the Global Drug-Pricing Landscape
To understand what is at stake for Canada, context matters. The United States maintains by far the highest pharmaceutical prices in the world. According to the most recent annual report from Canada’s Patented Medicine Prices Review Board (PMPRB), the average U.S. list price of a drug exceeds three times the equivalent Canadian price. Canada itself ranks fifth-highest among developed nations — not a bargain basement, but far below the American benchmark.
Doug Clark, a former executive director of the PMPRB, noted to The Globe that the Lilly agreement defines the MFN price as the second-lowest international reference price. That definition matters: it means the real pressure falls on the countries at the bottom of the international pricing scale, not on Canada, which tends to sit somewhere in the middle of the G7 range. “The pressure is really on the countries setting the floor,” Clark said.
That relative position may offer Canada some insulation — but it does not eliminate the concern. The very existence of agreements in which a foreign government claims a share of revenues from sales on Canadian soil raises fundamental questions about sovereignty over domestic health policy, and about who ultimately sets the terms under which Canadians access medicines.
A Domestic Policy Already Under Pressure
These revelations arrive at a moment when Canada’s pharmaceutical policy framework was already under significant strain, and when the industry was already pressing for structural changes.
In recent years, Innovative Medicines Canada — the primary lobby group for patented drug manufacturers — has argued that Canada needs to reform its approach to drug pricing and market access if it wishes to be seen as a reliable destination for pharmaceutical investment. The industry has pushed for higher prices and for shorter timelines for obtaining full reimbursement approval from public drug plans, a process that currently ranks among the longest in the G7.
The federal government responded this spring by establishing a pharmaceutical task force to help Ottawa navigate the geopolitical pressures reshaping the industry. The task force released a report in July containing 39 recommendations, and the government is expected to respond before the end of the year.
Mina Tadrous, a Canada Research Chair in real-world evidence and pharmaceutical policy at the University of Toronto, argued that the current moment calls for creative thinking rather than reactive concession. He pointed to one possible model: Ottawa and the provinces could agree to higher drug prices in exchange for concrete commitments — expanded manufacturing capacity on Canadian soil, or increased research and development spending within the country.
“There’s an opportunity here to be thinking more broadly about revisiting the way we value and talk about drugs in general,” Tadrous said.
The Broader Stakes for Canadian Health Policy
What these documents illuminate, even in their heavily redacted form, is the degree to which Canadian pharmaceutical policy now operates within a geopolitical force field largely shaped in Washington. The MFN pricing model, as structured, treats Canadian drug prices not as a domestic policy outcome but as a variable to be adjusted in service of American fiscal priorities.
Canada’s universal public health insurance system — delivered through a patchwork of federal frameworks and provincial plans — depends on the ability of governments to negotiate drug prices that are both fair to manufacturers and sustainable for public budgets. If a portion of any price increases negotiated with major drug companies flows directly to the U.S. Treasury rather than supporting Canadian patients or research capacity, the logic of that system is fundamentally disrupted.
The federal government has not yet commented publicly on the specific implications of the Pfizer and Lilly agreements for Canadian drug pricing. But the pharmaceutical task force report, the ongoing lobbying pressure from industry, and now these documents together make one thing clear: the decisions Ottawa makes in the coming months will carry consequences well beyond the domestic political calendar.
