Former US President Donald Trump has expressed intentions to revive a contentious drug pricing policy from his first term. This policy, referred to as the “Most Favoured Nation” rule, sought to link the prices of specific medications for Americans to those in other countries, aiming to significantly cut down drug costs. Initially finalised in late 2020, the rule faced legal hurdles that led to its suspension by federal courts, and it was ultimately rescinded by President Joe Biden in 2021.
The proposed rule primarily targeted Medicare payments for certain drugs administered in clinical settings. However, the exact drugs and payment structures applicable under the new directive remain unclear. In a post on Truth Social, Trump announced plans to sign an executive order aimed at reducing prescription drug prices by as much as 80%. He emphasised that this policy would ensure the US pays no more for medications than the lowest price available anywhere in the world.
This announcement coincides with potential new tariffs on pharmaceutical imports, a reconsideration of exemptions previously granted during his first administration. While Trump claims these measures could lead to lower prices, experts warn they may contribute to shortages, particularly of generic drugs, potentially driving up overall costs.
Should the executive order mirror the previous 2020 rule, Medicare beneficiaries could see decreased prices. Nevertheless, the potential impact on patient access to essential medications is a significant concern among experts, contingent on how precisely the policy is implemented.
While lowering drug prices was a focal point of Trump’s earlier term, he has shifted attention away from it in recent years. Notably, his campaign had distanced itself from the “Most Favoured Nation” concept, which faces substantial opposition from many Republicans. Recent discussions within the administration suggest a revival of this idea as a means to address substantial spending cut requirements for Medicaid outlined in the House GOP’s financial legislation.
The original framework aimed to tie Medicare’s reimbursements to the prices set by other nations, a model that could have resulted in an estimated saving of about US$86 billion, derived from significant discounts these countries negotiate with pharmaceutical companies. With the 2022 passing of the Democrats’ Inflation Reduction Act, Medicare gained the ability to negotiate prices for a select few drugs each year, marking a substantial policy shift.
Experts believe that reinstating a “Most Favoured Nation” rule could lower both out-of-pocket costs and premiums for beneficiaries, as drug pricing directly influences these expenses. However, the path ahead is fraught with challenges, and the pharmaceutical industry is likely to mount vigorous opposition, as seen in previous attempts to implement similar measures.