WASHINGTON — The final two months before a presidential election don’t typically feature much policymaking, and there are rules about how quickly the government can implement big changes. But there’s a way for President Trump to pull off a major, last-minute policy change — and drug industry lobbyists are worried, given his campaign trail rhetoric on lowering drug prices, he just might.

The policy at issue, they say, is known as a “most favored nations” policy. It would drastically cut how much the U.S. pays for injectable drugs by tying reimbursement to lower prices paid in some other countries. The drug industry hates the idea, and says the policy would virtually decimate innovation.

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  • The issue all along with the Trump proposal to apply MFN limits on any drug prices is that he appears to only be concerned for government programs, in particular Medicare, and probably Medicaid can be thrown into that mix as well. That simply means Pharma will cost shift the decrease in revenue over to the commercial insurance market, and we have the historic balloon being squeezed down here, and it just expands up there. I have been in favor of a MFN pricing restriction for ALL drugs for ALL payers (an “all payer” system) for many years as the only way to pin down a correct, fair price of drugs so that at least some principles of market economics could then be applied. The problem we have is that in healthcare, we haven’t actually tried a “true” market system where a provider of good/service is not allowed to discriminate on price, and that has led to huge economic rents being paid to unnecessary intermediaries (insurance companies and PBMs). Move to a non-discriminatory, transparent all-payer pricing model, and competition would actually flourish. But if only the government plans get the MFN benefit, the commercial side will see a massive increase in drug prices.

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