President Donald Trump during an executive order signing in the Oval Office of the White House in … More
President Trump recently announced on Truth Social that the United States will adopt a pricing strategy where it pays the same amount as the nation with the lowest pharmaceutical prices worldwide. The President mentioned that prices could potentially decrease by 30% to 80% from current levels, emphasizing the magnitude of the executive order he planned to sign. However, uncertainties and challenges surround the order.
The proposed model aims to align prices in the U.S. with those of similarly wealthy nations based on GDP per capita. The concept, known as the most favored nation model, sets a cap on the prices paid for high-cost physician-administered drugs to match the lowest price available in comparable countries.
In previous years, the Department of Health and Human Services introduced various approaches, including the MFN model, to reduce Medicare prescription drug expenses by linking prices to an international index of countries with similar economic profiles. Despite a previous executive order by Trump in 2020 being halted in court, the current administration is pushing forward with a phased implementation of the MFN strategy.
The latest executive order instructs the Secretary of HHS to communicate MFN price targets to pharmaceutical manufacturers within a month to align prices with those of other developed nations. However, challenges lie ahead in creating a cohesive price index due to differences in drug launches, pricing mechanisms, and international regulations.
The order also encourages manufacturers to sell their products directly to consumers at MFN prices voluntarily, but without a legal framework in place for enforcement. The potential rollout of such programs may face obstacles, especially for drugs without existing direct-to-consumer sales channels.
If the voluntary approach fails, the Secretary of HHS is directed to propose a rulemaking plan for mandatory MFN pricing. However, the order lacks specifics on the scope of drugs included, countries involved, and implementation mechanisms, raising legal concerns regarding constitutional authority.
While the administration aims to address high drug prices and global disparities, challenges in implementation and legal implications remain unresolved. The complexities of aligning U.S. prices with international standards pose significant hurdles for the proposed MFN model.
