The Trump administration said on Tuesday that its “Most Favored Nation” drug pricing framework could save federal and state governments about $64.3 billion over the next 10 years. The White House also said the policy could generate around $529 billion in total domestic savings across all US markets during the same period.
The administration said the policy aims to reduce the gap between drug prices in the United States and other wealthy countries. Under the framework, drugmakers will voluntarily offer newly launched medicines in the US at prices similar to those charged in other high-income nations.
The White House said the pricing policy will apply across all parts of the US market, including private insurance plans, government healthcare programs and direct cash payments by consumers.
What is MFN drug pricing framework?
The “Most Favored Nation” framework is a pricing system that links US drug prices to lower prices paid in other developed countries. The Trump administration said Americans often pay much more for medicines than patients in Europe and other wealthy nations.
According to the White House, the administration has already reached voluntary pricing agreements with 17 pharmaceutical companies. These agreements aim to reduce the cost of medicines under the government’s Medicaid program and for people who pay directly for drugs without insurance coverage, reported Reuters.
The administration said it plans to expand the program further. It expects to sign similar agreements with most manufacturers of sole-source brand-name drugs and biologic medicines in the country.
The White House said the framework works through a mix of lower US prices and higher prices in some foreign markets. “Taken together, the MFN framework aims to equalize drug prices through the combination of decreases in US prices and increases in prices faced by other developed countries,” the administration said in its statement.
How could the policy affect patients and drug companies?
The administration also announced lower prices for GLP-1 drugs under the voluntary agreements. These medicines are widely used for diabetes treatment and weight loss. The White House said the agreements will help expand Medicare coverage for obesity treatments.
The policy could lower costs for millions of Americans who struggle with expensive prescription medicines. Healthcare costs remain a major political and economic issue in the United States, especially for older adults and people without strong insurance coverage.
Drug companies, however, may face pressure on profits if they accept lower prices in the US market. Pharmaceutical firms have been saying that high US drug prices help fund research and development for new medicines.
The Trump administration said the agreements remain voluntary and depend on cooperation from manufacturers. Still, officials said they expect most major drugmakers with exclusive products to join the framework in the future.