President Donald Trump announced on January 5, 2024, new agreements with nine major pharmaceutical manufacturers aimed at significantly lowering prescription drug prices for Americans. During a press briefing at the White House, Trump stated, “Starting next year, American drug prices will come down fast and furious and will soon be the lowest in the developed world.”
Under the agreements, the nine manufacturers will provide their medications to Medicaid recipients at most-favored-nation (MFN) discounts. This policy mandates that prices must align with those paid by patients in other developed nations. The companies involved in this initiative include Amgen, Bristol Myers Squibb, Merck, Novartis, and Sanofi, among others. Additionally, these manufacturers will offer drugs at substantial discounts through the new program, TrumpRx, which is set to launch early next year.
The Trump administration aims to exempt these drugmakers from tariffs for three years as part of the MFN pricing commitments. According to a White House fact sheet, the drugs covered will include treatments for various chronic conditions such as type two diabetes, rheumatoid arthritis, multiple sclerosis, asthma, chronic obstructive pulmonary disease, hepatitis B and C, and certain cancers.
Impact on Medicaid Recipients and Pharmaceutical Industry
Currently, approximately 30-40% of Medicaid drug prices exceed those in other wealthy nations, primarily in Europe. The administration anticipates that the new agreements will lead to significant reductions in drug prices for Medicaid patients. However, experts caution that the MFN pricing may have limited impact, as the Medicaid program already has a statutory “best price” provision ensuring the lowest price for U.S. commercial payers. Darius Lakdawalla, chief scientific officer at the University of Southern California’s Schaeffer Center, noted, “Medicaid users are starting out at prices well below the averages seen in the U.S. market.”
The White House revealed that the new agreements represent over $150 billion in investment commitments for U.S. manufacturing and research and development. Furthermore, several drugmakers will contribute active pharmaceutical ingredients to the Strategic Active Pharmaceutical Ingredients Reserve. This initiative is designed to strengthen U.S. drug manufacturing resilience during crises, including pandemics.
The administration envisions that the new pricing strategy will promote fairness in healthcare, allowing all Americans to access the same medical innovations developed with taxpayer funds. A senior administration official emphasized, “[The policy] affects every American so that they have the dignity to access the same medical innovations that our tax dollars helped develop.”
Future Considerations and Exclusions
Despite the optimism surrounding this initiative, some critical questions remain unanswered regarding the actual effects at pharmacy counters. The exclusion of injectable drugs and infusion medications from the TrumpRx program has raised concerns. The White House determined that these medications should not be available through direct-to-consumer platforms due to the necessity for administration by healthcare providers.
While the newly announced agreements are seen as a promising step toward lowering prescription drug costs, the administration has already established prior agreements with AstraZeneca, EMD Serono, Eli Lilly, Novo Nordisk, and Pfizer. With MFN deals now in place with 14 of the 17 largest drug manufacturers globally, attention turns to the remaining companies, including AbbVie, Johnson & Johnson, and Regeneron, with potential announcements expected in the future.
The Trump administration’s push for reduced pharmaceutical costs aligns with ongoing discussions about healthcare accessibility and fairness in the United States. As the implementation of these agreements unfolds, the primary focus will be on ensuring that American consumers see tangible benefits at the pharmacy counter.
