The Trump administration is actively pursuing most favored nation (MFN) strategies to bring U.S. prescription drug prices closer in line with those of other affluent countries. Although this strategy has been part of Trump’s agenda since his first term, it was not executed at that time. Now, in his second term, the administration is implementing MFN policies, which encompass a Medicaid model and a TrumpRx online platform for cash-pay patients. While these initiatives aim to significantly cut medication costs, their actual impact is limited, and in some cases, uncertain, appearing more as style over substance.
Medicaid’s GENEROUS Model
To secure a three-year break from impending tariffs, Trump has finalized agreements with 17 major pharmaceutical firms. These confidential deals are crafted to reduce the prices of certain drugs within Medicaid, the primary public health insurance program for low-income individuals, to match MFN levels or the second lowest prices found in other wealthy nations.
Research has shown that drug prices in the U.S. are approximately three times higher than elsewhere. The Trump administration seeks to lower domestic prices and increase them internationally, particularly in public markets like Medicaid and Medicare.
According to KFF reports, the Centers for Medicare and Medicaid Services created the voluntary GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) model to make MFN drug prices accessible to state Medicaid programs. This model involves CMS negotiating additional drug rebates with manufacturers, partially based on international prices.
A White House report recently estimated that adopting an MFN framework in Medicaid could save $64 billion over a decade. However, this figure is questionable due to unclear assumptions and various uncertainties affecting the model’s overall impact on Medicaid drug costs.
Details such as the specific drugs targeted and the extent of discounts remain largely undisclosed, making it challenging for independent analysts to assess their financial implications. It is also uncertain whether the negotiated MFN rates will offer substantial savings for Medicaid, as the program already benefits from non-MFN supplementary rebates alongside mandatory ones. Additionally, although the GENEROUS model is set to operate for five years, many of the Trump administration’s agreements have an expiration date within three years, leaving their future uncertain under subsequent administrations.
Critics argue that the MFN initiative does not directly tackle the issue of manufacturers’ control over list prices. This poses a potential challenge for the administration’s goals when companies involved in these deals release new drugs in the U.S. Close attention will be paid to list prices.
As STAT News reported months ago, it remains uncertain whether prices of newly launched U.S. treatments will match those in peer nations. The companies involved have not publicly committed to such alignment, and the confidential nature of the agreements complicates assessments.
Furthermore, establishing an MFN index requires a drug to launch in at least two comparator countries. In many cases, drugs receive U.S. marketing approval and pricing earlier, making it challenging to establish MFN indices for some time.
Given the international aspect of MFN, alignment on pricing and reimbursement with partner nations, particularly in Europe, is crucial for the strategy’s success. However, European reception of MFN has been unenthusiastic.
Neil Grubert, a global market access expert, shared on LinkedIn a summary of a presentation on MFN’s impact in Europe. Despite discussions, few countries have formally responded to the Trump administration’s requests for agreements.
To date, the United Kingdom is the only country to have negotiated an MFN-related deal with the U.S. The U.K. agreed to raise the cost-effectiveness threshold for drug and medical technology reimbursements in its National Health Service, potentially affecting pharmaceutical prices by covering more high-priced medications.
The Trump administration hopes other countries will follow the U.K.’s lead, but this has yet to occur.
Meanwhile, President Trump has repeatedly claimed success in convincing several European leaders to significantly increase drug prices, although these claims lack corroboration, according to Grubert. European authorities seem unconvinced about raising prices.
There is also limited awareness of the Trump administration’s pressure on manufacturers to move production to the U.S. This shift appears to be part of a broader trend predating MFN, potentially impacting the European life sciences sector negatively.
For drugs already on the market, list prices have generally risen domestically while decreasing in peer countries. A report from AARP last week indicated that prices for the 25 best-selling brand-name prescription drugs have risen by an average of 81% in the U.S., while dropping by 13% in similarly wealthy nations.
The price gap continues to widen. In terms of affordability, the Trump administration cites this as a reason for pursuing MFN policies. Rising list prices in the U.S. are significant for patients, particularly Medicare recipients and individuals in the deductible phase of their pharmacy benefits or those with co-insurance based on list prices.
TrumpRx Portal For Cash-Pay Patients
The second component of Trump’s MFN strategy is more visible in its effects. Pharmaceutical companies have agreed to sell some medications at discounted rates on a government-run website called TrumpRx. This direct-to-consumer portal increases access for self-pay patients seeking certain brand and generic drugs. It connects to platforms like GoodRx, Amazon Pharmacy, and Mark Cuban’s Cost Plus Drugs, as well as manufacturer sites for popular weight-loss medications like GLP-1s. Trump announced last week that over 600 generic drugs are being added to TrumpRx. However, these offerings often do not match international prices, making the MFN label misleading. Moreover, they are not even the lowest priced options available in America.
The administration has promoted the rollout as a significant new affordability effort. TrumpRx can assist patients in navigating available options, particularly for the uninsured and underinsured, by aggregating various cash-pay and discount channels in one place. However, it is unclear if the site offers meaningful savings beyond existing discount programs, and its usefulness is limited for those with health insurance.
Additionally, while discounted prices can be accessed at large chain pharmacies like CVS and Walgreens, they are generally unavailable at independent pharmacies, affecting nearly 20% of Americans who rely on rural pharmacies.
Overall, the administration’s dual approach to reducing prescription drug costs by linking U.S. prices to those in similarly wealthy nations has limited impact or, in some cases, lacks clarity.
