What Trump’s Most-Favored-Nation Deal Means for Drug Prices

Of course, it’s hard to know even how much the deal will save to Medicaid programs, he says. That’s because the terms of the deals are not publicly available, and neither are the prices Medicaid pays.  

One research letter in JAMA from July estimated that the most-favored-nation policies from 17 pharmaceutical companies that had already been agreed to would lead to $8.6 billion in savings a year for Medicaid programs. 

But those savings are likely only for the short term, says one of that study’s authors, Dr. Thomas Hwang, an assistant professor at Brigham and Women’s Hospital. “Long-term savings are likely illusory,” he says. That’s because evidence suggests that after most-favored-nation deals, companies often raise prices in other countries so that the prices that the U.S. compares its prices to will be higher. 

Already, the U.K. has agreed to cover drugs at higher prices than it did previously, says Dr. Suhas Gondi, an instructor at Harvard Medical School. He predicts that pharmaceutical companies will try to game the agreement by deciding not to launch new drugs in some countries so they won’t have to compare prices to that country.