In his new “Great Healthcare Plan,” President Trump has proposed to “codify” the administration’s most-favored-nation (MFN) drug pricing deals that have been agreed to by drug companies in recent months. These MFN agreements are based on the premise that the U.S. shouldn’t pay higher prices for prescription drugs than the prices paid in other comparable nations, an idea that President Trump promoted in his first term through various proposals that were ultimately not implemented.
In this second term, the Trump administration has conducted dealmaking behind the scenes to negotiate most favored nation pricing agreements with individual drug companies, bypassing more traditional regulatory or legislative approaches to secure these deals. The manufacturers have agreed to make certain products available to state Medicaid programs at most favored nation pricing, to introduce new medications at most favored nation pricing in the U.S., and to sell certain products directly to U.S. consumers at discounted prices. The manufacturers are also committing to increase their investment in U.S. manufacturing and in return they’ll receive a 3-year reprieve from tariffs that would otherwise be imposed.
In general, the details of these agreements remain confidential, which means that very little is known publicly about what exactly has been agreed to. Although price discounts for specific drugs were highlighted at various White House events, the full scope of these deals – including which drugs are subject to these agreements, what specific pricing has been agreed to, and how MFN prices are determined – is largely unknown.
As a result, it’s difficult to understand what it would mean to “codify” these deals. It’s also not clear what the mechanism would be for extending these deals to all Americans. While codifying most-favored-nation drug pricing could be helpful for bringing more transparency to these arrangements and guaranteeing that drug companies will deliver on what they’ve promised, policymakers would need substantially more information to turn these backroom voluntary deals into law.