Trump to announce new drug pricing agreement.
President Trump is set to announce another round of voluntary drug-pricing agreements today involving Bayer, Takeda, CSL and several midsized biotechnology companies.
Under the agreements, participating drugmakers are expected to provide “most-favored-nation,” or MFN, pricing on outpatient drugs purchased through state Medicaid programs. Prices would be tied more closely to the lower amounts paid in other developed countries, including Canada, Germany, France, Japan and the United Kingdom.
Some companies could also make selected medicines available directly to cash-paying patients through TrumpRx, bypassing insurance companies and pharmacy-benefit managers. In exchange, participating manufacturers could receive protection from pharmaceutical tariffs and potentially other regulatory benefits.
The Trump administration has already reached similar agreements with 17 major drugmakers, including Pfizer, Eli Lilly, Merck, Amgen, Johnson & Johnson, Novo Nordisk and AstraZeneca. It estimates the broader initiative could save federal and state Medicaid programs approximately $64.3 billion over 10 years.
The immediate benefits, however, appear to be concentrated on Medicaid programs and people buying selected medicines directly with cash. The announcement does not necessarily mean that Medicare beneficiaries or privately insured consumers will immediately pay less.
For the drug companies, the near-term earnings impact should be manageable because Medicaid represents only part of the U.S. market and companies already give rebates for their drugs to Medicaid recipients. However, tariff relief helps offset some of the reduced pricing (Yes…tariffs raise prices). The larger earnings risk would come if MFN pricing were eventually expanded across Medicare and private insurance.
This article was written by Greg Michalowski at investinglive.com.