Most favored nation policies being pursued by the Trump administration strive to better align prescription drug prices between the United States and peer nations. Theis approach to pharmaceutical pricing have been on President Trump’s agenda since his first term in office, though it wasn’t implemented then. In his second term, though, his administration is carrying out MFN policies which include a Medicaid model and a TrumpRx online platform for cash-pay patients. While the initiatives feature bold aims to reduce the cost of medicines, the impact is limited, and in some instances unclear, a case of style over substance.
Medicaid’s GENEROUS Model
In exchange for a three-year reprieve from threatened tariffs on their products, Trump has signed deals with 17 large pharmaceutical companies. These strictly confidential agreements between the administration and drug manufacturers are designed to lower the prices of selected drugs in Medicaid, the main public program providing health insurance coverage for low-resource individuals, to MFN levels or the (second) lowest offered in other similarly wealthy nations.
Studies have shown that list prices of drugs in the U.S. are about three times higher than in other countries. Insofar as it can effect change in the public markets, Medicaid and Medicare, the Trump administration wants to lower prices domestically and raise them internationally.
KFF reports that to make MFN drug prices available to state Medicaid programs, the Centers for Medicare and Medicaid Services developed the voluntary GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) model. Here, CMS negotiates supplemental drug rebates with pharmaceutical manufacturers, based at least to some extent on prices paid in other countries.
A recently released White House report projects that an MFN framework in Medicaid will save $64 billion over a 10-year period. However, the projected size of savings is dubious on several counts. First, it’s unclear what assumptions were made to develop the administration’s estimates, and there remain several uncertain factors that make it difficult to assess the overall impact the new model will have on Medicaid drug costs.
And exact details such as which targeted drugs and how steep the discounts are, remain largely hidden from view. This makes it almost impossible for independent observers to evaluate their financial scope. It’s also unclear if the negotiated MFN rates will produce significantly greater cost savings for Medicaid, given that the program already secures net prices based in part on non-MFN supplementary rebates in addition to mandatory ones. Finally, while GENEROUS model is supposed to operate for five years, many the Trump administration’s voluntary agreements have an end-date less than three years from now. It’s anyone’s guess whether they’d be extended (as well as the GENEROUS demonstration project) under a future administration.
But perhaps the greatest flaw critics cite is that the MFN initiative doesn’t directly address manufacturers’ pricing power with respect to list prices. In this context, the administration’s goals may face a test when signatories to the deals signed with the Trump administration launch new drugs in the U.S. Observers will keep a keen eye on list prices.
As STAT News reported several months ago, it’s unclear whether the prices of newly launched treatments in the U.S. will align with other peer nations. The companies haven’t publicly declared their intention to do so. And the proprietary nature of the agreements makes it difficult to assess.
Moreover, establishment of an MFN index requires that a drug launches in at least two comparator countries. Given that in many instances, drugs receive marketing approval earlier in the U.S. and are priced and reimbursed sooner, establishing MFN indices will be impossible in some cases, at least for a period of time.
In light of the international character of MFN, it’s essential that partner nations, particularly in Europe, are more in sync on pricing and reimbursement in order for the strategy to work. But MFN’s reception in Europe has been anything but encouraging.
Neil Grubert, an expert in global market access, posted on LinkedIn a summary of a presentation he gave on the effects of MFN thus far in Europe. For all of the talk of MFN, relatively few countries have jumped aboard with formal responses to the Trump administration’s requests for dealmaking.
Until now, the United Kingdom is the only country to have negotiated an MFN-related agreement with the U.S. In that deal, the U.K. promised to raise the level of the cost-effectiveness threshold below which drugs and other medical technologies and procedures are reimbursable in Britain’s National Health Service. This could indirectly influence the prices of pharmaceuticals by allowing a small increase in the number of higher-priced medications that will be covered.
The Trump administration would like other countries to follow suit and strike similar arrangements as the one the U.K. agreed to, but this hasn’t happened yet.
In the meantime, President Trump has claimed repeatedly to have prevailed on several European leaders to dramatically raise their drug prices, assertions that “have no corroboration,” according to Grubert. Government authorities don’t appear persuaded to increase prices.
At the same time, there appears to be little awareness of the pressure from the Trump administration on manufacturers to onshore production to the U.S. This shift appears to be underway, an acceleration of a long-term trend pre-dating MFN that could have negative implications for the European life sciences sector.
And as for already approved drugs that have been on the market, what we know about list prices is that they’ve generally risen over time while they’ve fallen among our peers. A report from AARP last week showed that prices for the 25 top-selling brand-name prescription drugs have increased by an average of 81% in the U.S., while falling by 13% in comparably wealthy nations.
The divergence in prices continues unabated. In the context of affordability, which the Trump administration has pointed to as a justification for pursuing MFN policies, the increasing list prices in the U.S. matter to patients, especially Medicare recipients and commercially insured individuals in the deductible phase of their pharmacy benefit before insurance kicks in, and when cost-sharing is expressed in terms of co-insurance as a percentage of the list price.
TrumpRx Portal For Cash-Pay Patients
The second part of Trump’s MFN bid is somewhat more visible in its impact. Drug makers have agreed to sell some of their medications at discounts on a federal government-run website called TrumpRx. The direct-to-consumer portal expands access for self-pay patients seeking certain brand and generic drugs. The platform connects to sites such as GoodRx, Amazon Pharmacy, and Mark Cuban’s Cost Plus Drugs, but also drug manufacturer portals for medicines like the popular GLP-1s for weight loss. Trump announced last week that over 600 generic drugs are being added to TrumpRx. However, the offerings often aren’t aligned with prices overseas which makes the MFN moniker a misnomer. Furthermore, they’re not even the lowest priced options available in America.
The rollout has been touted by the administration as a major new affordability initiative. TrumpRx can indeed help patients navigate existing options, particularly the un- and underinsured and adds value by aggregating different cash-pay and discount channels in one place. But it’s unclear if the site delivers meaningful savings beyond what was already available to consumers through existing discount programs. And its value is very limited for those who have health insurance.
Moreover, while the discounted prices can be fulfilled at large chain pharmacies like CVS and Walgreens, they’re generally not available at independent ones and this includes some of the nearly 20% of Americans who rely on rural pharmacies.
Overall, the administration’s two-pronged approach to reducing prescription drug costs for Americans by pegging U.S. prices to ones offered in comparably wealthy nations is limited in impact or, in some instances, lacks clarity.