Administration Releases Report on Most-Favored Nation Drug Pricing Policy

The Trump administration on Tuesday released the most detailed look to date at its most-favored nation drug pricing policy and its projected impact. The report, produced by the administration’s Council of Economic Advisers, estimates that pharmaceutical companies’ pledges to offer all new drugs at most-favored nation pricing would save the U.S. $529 billion over the coming decade.

A White House spokesperson told STAT in an email that the most-favored nation pricing calculation represents the definition that pharmaceutical companies agreed to in their confidential deals with the administration. The policy forms a key part of the White House’s election-year messaging on lowering drug costs, although many specifics of those agreements have not been made public.

The report lays out the definition of most-favored nation pricing. It also notes that the projected savings come with substantial caveats and rely on large assumptions. The ultimate effects on consumers remain uncertain.

Most-favored nation pricing ties the cost of new drugs in the United States to the lowest prices paid in other developed countries. The administration has promoted the approach as a way to reduce federal spending on prescription medicines. The $529 billion savings projection covers a 10-year period.

Officials have not detailed how the figure was calculated or the exact assumptions behind it. The report represents the most comprehensive public accounting of the policy so far.

Many key details of the confidential deals between the administration and drug manufacturers have not been disclosed. It is unclear how the pricing changes would affect out-of-pocket costs for patients or overall drug innovation. The administration has not released external validation of the savings estimates.