During his first term, attempts by President Donald Trump to slash drug prices and reduce Medicare spending through a most favored nation (MFN) clause crumpled under pressure from the biopharma industry and House Republicans, with his last gasp effort quashed by a Maryland judge in January of 2021.
Four years later, Trump is at it again, trying to push through an MFN policy which would tie the amount the U.S. government pays for a selective group of drugs to the lower prices paid by other high-income countries, according to a report from Politico.
Citing three unnamed sources, the Washington-focused news outlet says that Trump will sign an executive order next week that would trigger the MFN policy. One of the sources told Politico that he hinted at the move in an Oval Office meeting with Canada Prime Minister Mark Carney on Tuesday.
“We’re going to have a very, very big announcement to make—like as big as it gets,” Trump said during the event. “It will be one of the most important announcements that have been made in many years about a certain subject.”
The administration has been unsuccessful in its attempts to convince Republicans to include an MFN clause in their domestic policy package, which would link Medicaid drug costs to the lowest prices paid by other developed countries, Politico said, and the president is attempting to advance the initiative on his own using his “existing authorities.”
As reports of the potential plan have swirled, the NASDAQ Biotechnology Index has dropped by 8% over the last five days. That decline also includes a dramatic drop seen after the appointment of Vinay Prasad, M.D., as head of the FDA's Center for Biologics Evaluation and Research.
On Wednesday, a Wall Street Journal editorial blasted Trump’s potential measure as a “bad policy,” and an expansion of “price controls.”
“Some Republicans see this as a path of less political resistance to achieve some $880 billion in Medicaid savings that is the target of their reconciliation outline," the newspaper's editorial board wrote. "But savings from Mr. Trump’s drug plan would be negligible, and the scheme would harm innovation and raise prices for Americans with private insurance.”
The biopharma industry has long argued that efforts to reduce the price of drugs—such as those imposed by the Inflation Reduction Act—will negatively impact the ability of drugmakers to discover and develop new drugs.
The Trump effort also comes as the industry is bracing for tariffs threatened by the administration. Pharma tariffs were excluded from Trump’s “Liberation Day” reveal of baseline and reciprocal trade duties last month, but officials have since said that sector-specific tariffs are in the works.
On top of this, the industry is also sorting out the impacts of widespread staff and funding cuts to the Department of Health and Human Services and the National Institutes of Health.