When President Trump welcomes Japanese Prime Minister Sanae Takaichi to the White House next week, the two leaders will discuss how to strengthen the U.S.-Japan alliance, grow both countries' economies, and safeguard their collective security.
All three of those objectives would be well served by demanding that Japan end its freeriding off America's pharmaceutical sector.
For more than 40 years, Japanese officials have systematically suppressed drug spending through top-down price controls. Those officials set artificially low prices for new drugs -- and then repeatedly further reduce the prices of those treatments through annual revisions and reviews. In 2025, the government cut the prices of nearly half of all patented medicines.
These policies depress American drug companies' sales in Japan, which remains one of the world's richest and most populous countries. If Japan paid the same price for drugs as Americans do, biotech companies would earn an additional $36 billion in revenue.
That abdication of responsibility forces the United States to finance a disproportionate share of global drug research and development. The United States spends almost double what Japan spends on new medicines as a share of GDP. We account for 55% of all global pharmaceutical R&D investment, despite making up only a quarter of the global economy and less than 5% of the world's population.
Japan's refusal to pull its weight doesn't merely undermine America's economy. It also threatens both America's and Japan's national security.
If democratic allies like Japan keep depriving U.S. biotech firms -- and Japanese firms, for that matter -- of tens of billions in revenue, those firms will be less able to reinvest in new lines of research. That means fewer labs and factories will be built to ensure that we invent and manufacture the most cutting-edge treatments of the 21st century in the United States, Japan, and other free nations.
President Trump has already demonstrated that it's possible to pressure allies to end their pharmaceutical freeriding. He recently struck an agreement with the United Kingdom, which promised to double its spending on new medicines -- largely by raising the cost-effectiveness threshold that bureaucrats use to set drug prices and reducing the amount of revenue the government claws back from biotech companies.
A similar deal with Japan would benefit patients in America -- and in Japan too.
Right now, public insurance in Japan covers only about half of new medicines, meaning that Japanese patients wait much longer to access innovative treatments compared to Americans -- if they gain access at all. That rationing hurts patients' health and reduces Japanese workers' productivity, which only exacerbates the challenges Japan is already facing due to its aging population and workforce.
In other words, expanding access to the treatments that keep Japanese workers healthier for longer could more than pay for itself in the long run.
If President Trump can press Prime Minister Takaichi for reforms at their upcoming summit, it'd help strengthen an 80 year alliance and boost one of America's most economically and strategically vital industries. American and Japanese workers would both enjoy more jobs. And the increase in research and access would benefit American and Japanese patients alike.
Ambassador Jeffrey Gerrish served as the Deputy U.S. Trade Representative for Asia, Europe, the Middle East, and Industrial Competitiveness from 2018 to 2020.
All three of those objectives would be well served by demanding that Japan end its freeriding off America's pharmaceutical sector.
For more than 40 years, Japanese officials have systematically suppressed drug spending through top-down price controls. Those officials set artificially low prices for new drugs -- and then repeatedly further reduce the prices of those treatments through annual revisions and reviews. In 2025, the government cut the prices of nearly half of all patented medicines.
These policies depress American drug companies' sales in Japan, which remains one of the world's richest and most populous countries. If Japan paid the same price for drugs as Americans do, biotech companies would earn an additional $36 billion in revenue.
That abdication of responsibility forces the United States to finance a disproportionate share of global drug research and development. The United States spends almost double what Japan spends on new medicines as a share of GDP. We account for 55% of all global pharmaceutical R&D investment, despite making up only a quarter of the global economy and less than 5% of the world's population.
Japan's refusal to pull its weight doesn't merely undermine America's economy. It also threatens both America's and Japan's national security.
If democratic allies like Japan keep depriving U.S. biotech firms -- and Japanese firms, for that matter -- of tens of billions in revenue, those firms will be less able to reinvest in new lines of research. That means fewer labs and factories will be built to ensure that we invent and manufacture the most cutting-edge treatments of the 21st century in the United States, Japan, and other free nations.
President Trump has already demonstrated that it's possible to pressure allies to end their pharmaceutical freeriding. He recently struck an agreement with the United Kingdom, which promised to double its spending on new medicines -- largely by raising the cost-effectiveness threshold that bureaucrats use to set drug prices and reducing the amount of revenue the government claws back from biotech companies.
A similar deal with Japan would benefit patients in America -- and in Japan too.
Right now, public insurance in Japan covers only about half of new medicines, meaning that Japanese patients wait much longer to access innovative treatments compared to Americans -- if they gain access at all. That rationing hurts patients' health and reduces Japanese workers' productivity, which only exacerbates the challenges Japan is already facing due to its aging population and workforce.
In other words, expanding access to the treatments that keep Japanese workers healthier for longer could more than pay for itself in the long run.
If President Trump can press Prime Minister Takaichi for reforms at their upcoming summit, it'd help strengthen an 80 year alliance and boost one of America's most economically and strategically vital industries. American and Japanese workers would both enjoy more jobs. And the increase in research and access would benefit American and Japanese patients alike.
Ambassador Jeffrey Gerrish served as the Deputy U.S. Trade Representative for Asia, Europe, the Middle East, and Industrial Competitiveness from 2018 to 2020.
