US President Donald Trump has called on pharmaceutical manufacturers to lower US drug prices in line with the Most Favored Nation (MFN) policy first proposed in an executive order in May.
On 31 July, the White House said letters were sent to leading pharmaceutical manufacturers like AstraZeneca, AbbVie, Eli Lilly, Regeneron, Novartis, Pfizer, and more, calling on them to take steps to lower drug prices in the US such that they match the lowest prices in other developed countries within the next 60 days. President Trump also shared many of these letters on the social media platform Truth Social.
While this is not the first time the administration has floated the MFN policy, this time, the language used to address pharma companies is more aggressive. If the companies do not comply, the order states, the federal government 鈥渨ill deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices.鈥�
Cyrus Fan, research analyst in the said, “While negotiations between the White House and pharma companies have been ongoing since May, the latest development show frustration in the progress of negotiations by the Trump administration. The letters are intended to publicly pressure the pharma companies into complying with MFN pricing. Though it is unclear what the consequences will be if the pharma companies do not comply.”
A spokesperson for the industry body BIO said, 鈥淲e share the Administration鈥檚 goal of ending foreign freeloading on American innovation. But importing socialist price controls would lead only to fewer new medicines and the rationing of healthcare for Americans and would strengthen and embolden foreign adversaries whose goal is to dominate the world in biotechnology.鈥�
The BIO spokesperson said eliminating the middlemen, ending the abuse of drug reimbursement programs like 340B would be a way to simplify the system, protect patients and narrow the pricing gap between the US and other developed countries.
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By GlobalData鈥楳iddlemen鈥� or pharmacy benefit managers (PBMs) are often blamed by the pharmaceutical companies for high drug prices. PBMs on their part have said they negotiate with different stakeholders to drive down costs, and pass on savings obtained through rebates and discounts to health plans.
The letter to the manufacturers implores them to provide drug at 鈥淢FN rates鈥� to all Medicaid patients, and commit to providing these prices for newly launched drugs to all major US buyers like Medicare and commercial plans.
The latest announcement also calls on drug manufacturers to opt in for platforms where drugs can be sold directly to patients at prices that are comparable to those in developed nations, which are currently offered to third party payers.
Among the letters posted on Truth Social, Trump directly called on several CEOs like Albert Bourla of Pfizer, and Leonard Schleifer of Regeneron, by using their first names instead of a formal address.
Several countries use international reference pricing as a strategy in their health systems. However, chief among the criticism following the May executive order has been the lack of details. Industry experts have highlighted a lack of clarity on how any potential list price changes will affect the prices patients pay at the pharmacy counter given the complex dynamics and multiple stakeholders in the US healthcare system. There is also a concern that if the US implements reference pricing, it could influence when companies choose to launch drugs in certain ex-US markets to avoid those potentially lower prices from being used as references.
Furthermore, pharma companies have chosen the litigation route to fight legislative changes targeting drug prices, like the Inflation Reduction Act, and the same could be seen with the MFN executive order, as per a Bank of America report.
Note: Paragraph number four was updated with a comment from Cyrus Fan after publication.
