President Donald Trump plans to unveil a new strategy for reducing U.S. prescription drug costs by linking Medicare prices to those in other wealthy nations. This approach, known as the “most favored nation” pricing model, aims to ensure that the U.S. pays no more than the lowest prices available abroad. Trump is set to sign an executive order implementing this policy, following an unsuccessful attempt during his first term.
Currently, prescription drug prices in the U.S. are significantly higher—up to ten times—than in comparable countries, according to the Rand Corporation. The policy targets Medicare Part B drugs, such as chemotherapy medications, linking their costs to prices in countries like Canada, Germany, and the U.K. The Trump administration previously estimated that this could save U.S. taxpayers over $85 billion in seven years.
Experts generally support the initiative, arguing that it will help address soaring drug prices, a major component of inflation. However, skepticism persists regarding whether the plan can withstand opposition from the pharmaceutical industry, which previously successfully challenged Trump’s effort in court. Public sentiment appears supportive, with over 75% of U.S. adults deeming medication costs unaffordable, but the proposal may still face strong resistance from drug manufacturers.
Industry representatives suggest that the Trump administration should focus on reforming pharmacy benefit managers (PBMs), who negotiate drug prices but have been criticized for potentially inflating costs. Additionally, the Biden administration has introduced legislation allowing Medicare to negotiate directly on drug prices, expected to save billions.
Experts advocate for a balanced approach, recommending simultaneous efforts to tackle both price disparities and the pharmaceutical supply chain. The Trump administration’s move, while facing challenges, could provide a path toward more equitable drug pricing in the U.S.
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