Questionable White House Math Savings Most Favored Nation Drug Prices

The White House released a report this week highlighting projected savings of over $500 billion over ten years from most favored nation (MFN) agreements, which link U.S. prescription drug prices to those in other wealthy countries. These projections are largely speculative, based on questionable modeling assumptions.

Presidential administrations often aim to present themselves favorably, and Trump’s administration is no exception. However, the tendency to exaggerate positive outcomes appears more pronounced under President Trump than in modern history.

Regarding MFN drug pricing, Trump’s claim of having the “lowest drug prices anywhere in the world” does not withstand scrutiny. Research disputes the administration’s assertion that its platform TrumpRx offers Americans the world’s lowest prices on certain drugs.

The administration’s document released Tuesday discusses MFN provisions for existing drugs, including TrumpRx, and future drug launches.

MFN Framework for Existing Drugs

The voluntary MFN framework mandates that manufacturers offer existing drugs to Medicaid at MFN prices, potentially saving over $64 billion in federal and state funds over ten years, according to the White House. The administration states that discounts on TrumpRx.gov will provide significant savings for drugs purchased outside of insurance.

The agreements between the Trump administration and drug manufacturers are confidential and temporary, lasting three years. They are thought to be based on MFN prices or the “second-lowest” among a group of nine wealthy countries. However, without details of these agreements, it’s unclear if the prices are indeed lower than those achieved through Medicaid’s current rebate system.

MFN calculations depend heavily on access to international net prices, which are mostly unavailable. European countries, including France, have regulations preventing the public release of net prices.

If operational hurdles are overcome, the administration seeks legislative action to formalize the deals, though this is unlikely due to current congressional sentiment.

In a separate development, President Trump announced a federal direct-to-consumer website, TrumpRx, last autumn. Since February, it has offered several dozen prescription drugs at discounted prices.

Despite this, TrumpRx has had minimal effect on consumer prices. Critics point out that most drugs on the site are in later stages of their lifecycle, facing competition from cheaper generics or biosimilars. Alternatives like Mark Cuban’s Cost Plus Drug Company and platforms like BlinkRx and GoodRx often provide more savings on generics than TrumpRx.

TrumpRx’s focus on branded products makes it less relevant for insured patients, as their co-payments are typically lower than TrumpRx discounts.

Purchases made with cash don’t count towards insurance deductibles or out-of-pocket maximums. This means patients needing other medications might still face costs during their deductible phase, potentially losing out on insurance benefits and facing financial risk.

The administration backs legislation to have insurers count MFN-priced drug purchases toward deductibles and out-of-pocket maximums. However, it’s anticipated that this would lead to higher premiums to balance insurers’ increased costs.

Prospective MFN

According to the White House’s MFN framework, drug manufacturers will price new U.S. drugs similarly to those in other affluent countries, promising $529 billion in savings over ten years across public and commercial sectors.

The model predicts a 30% decrease in U.S. drug prices while overseas prices might increase. This suggests potential global price alignment.

The MFN framework, as envisioned by the Trump administration, aims to “equalize” drug prices by reducing them in the U.S. and raising them in other developed countries. However, the concept of “equalizing” prices is complex, as prices for goods and services often vary significantly even among wealthy nations.

Questions remain about whether other developed countries will actually increase drug prices, as many are working to lower them due to budget constraints.

The framework assumes simultaneous drug approvals in the U.S. and comparator nations. The White House claims that manufacturers will offer new drugs at comparable prices. However, with more than 70% of drugs approved first in the U.S., this assumption raises questions. Differences in regulatory timelines and processes may delay pricing and reimbursement decisions.

There is concern that manufacturers might avoid launching drugs in certain jurisdictions to escape MFN pricing. Recent CEO remarks suggest potential avoidance of some countries.

None of the estimated savings have been independently verified due to undisclosed agreement terms. The White House maintains that these agreements contain sensitive data that could affect financial markets.

Critics, like Public Citizen, note that drug companies have not expressed concerns to shareholders about impacts from the White House deals, raising questions about the agreements’ substance. It’s possible that companies expect increased patient use due to lower prices, or that agreements include compensatory mechanisms.

Senator Bernie Sanders’ staff reported in April that 15 companies involved in MFN deals saw a 66% profit increase last year, suggesting the deals do not negatively impact business. They also noted that Trump’s 2025 tax cuts delayed or exempted costly drugs from Medicare price negotiations, including the cancer drug Keytruda.

The Trump administration countered, arguing that Sanders’ analysis relied on list instead of net prices, exaggerating profit estimates.

Currently, White House savings estimates from MFN pricing remain speculative, relying on unrealistic assumptions. The true impact on savings and drug company profits remains to be seen.