Spectre of 'favoured nation' pricing manifests again in US
President Donald Trump is rumoured to be resurrecting a policy proposed in his first term that would see drug prices offered to federal programmes tied to those offered overseas.
According to Politico, Trump will issue an executive order in the next few days to pursue the use of a so-called 'most favoured nation' approach, which would set the price at the lowest level paid by a comparable foreign country, for selected drugs provided through Medicare as well as those supplied through the Medicaid programme.
He announced a similar move towards the end of his first term in 2020, although that did not survive the incoming Biden administration.
It's worth noting that the idea has some level of bipartisan support in Congress, given that US Senators Josh Hawley (R-Missouri) and Peter Welch (D-Vermont) have just tabled a bill – the Fair Prescription Drug Prices for Americans Act (PDF) – that proposes setting prices at the average of those in six other countries, namely Canada, France, Germany, Japan, Italy, and the UK.
The bill would also impose stiff civil monetary penalties on pharma companies that violate the pricing rule.
Politico said that it was told by three people familiar with the matter that an order is in the works, although it understands the details have not been finalised and the plan has not yet been formally backed by the President.
In his first term, Trump repeatedly slammed the high prices paid by American health systems and patients from medicines compared to other parts of the world and, early in his second administration, issued an order pledging to stop the pharma industry charging US patients "more than those in other countries for the exact same prescription drugs, often made in the exact same places."
Back in 2020, the Pharmaceutical Research and Manufacturers of America (PhRMA) industry body sued to block the proposed MFN policy, arguing that it exceeded the authority of the Centers for Medicare and Medicaid Services (CMS), was contrary to law, would disrupt US patients' access to medicines, and have a detrimental impact on R&D. It eventually succeeded in having it blocked in the courts.
Last month, STAT identified three fundamental flaws with the MFN proposal, namely that it can be gamed through the use of confidential discounts overseas, could see companies pull out of foreign markets to avoid the comparisons, and surrenders pricing decisions to other governments.
Nevertheless, in a commentary on his new bill, Sen Hawley said resurrecting the MFN approach would offer relief for millions of patients by prohibiting pharma companies from selling drugs in the US at higher prices than elsewhere.
"For too long, Americans have subsidised prescription drug costs for foreigners while paying outrageous prices for their own medications," he asserted.
"President Trump previously advanced major reforms to ensure that American patients pay the same prices as consumers abroad," continued Hawley. "This bipartisan legislation would continue that work to end a drug market that favours Big Pharma, make prescriptions affordable again, and empower Americans to get the care they need."
In March, the America First Policy Institute, a right-leaning think tank, published a paper suggesting that MFN could be incorporated under the Medicare pricing negotiation framework introduced under the Biden administration.
Trump has said he intends to maintain Medicare pricing negotiations but will simplify the "administratively complex and expensive regime."
Photo by Danielle Rice on Unsplash
