On Saturday, the White House revealed that 14 out of the world's 17 largest pharmaceutical companies have agreed to reduce the prices of their medications in the United States. This development comes in response to the "Most Favored Nation" pricing strategy championed by President Donald Trump.
In an official statement on its X account, the White House quoted Mehmet Oz, the director of the Centers for Medicare and Medicaid Services (CMS), who said this policy aims to be equitable for American consumers.
The announcement followed a significant event at the executive headquarters, where Trump confirmed an initial agreement with nine leading pharmaceutical firms to align the prices of their most sought-after drugs with the lowest prices paid by other developed nations.
Trump declared that these companies have pledged to implement "Most Favored Nation" pricing for Medicaid and will disclose information about their drugs on the digital platform TrumpRX.gov.
According to the White House, involved companies include Pfizer, Amgen, Novartis, Merck, Sanofi, and Bristol Myers Squibb. Their medications could offer discounts of up to 70% for Medicaid beneficiaries and participants in other public health programs.
The president described the agreement as "the greatest victory for patient affordability in the history of American healthcare" and emphasized his administration's intent to dismantle the price monopoly held by pharmaceutical companies and insurers, whom he accused of exploiting the healthcare system for decades.
Additionally, Trump announced plans to convene major insurers to urge them to lower prices, amid legislative gridlock in Congress over the renewal of Obamacare subsidies that currently assist over 30 million people.
While Democrats criticize the White House for undermining the public healthcare system, some Republican sectors argue that Obamacare is unsustainable and has benefited insurers more than citizens.
The new drug pricing policy is set to be a cornerstone of Trump's economic agenda for 2026, although there are lingering questions about its effect on Americans who do not qualify for Medicaid.
In late November, Medicare confirmed a substantial reduction in the prices of 15 high-cost prescription drugs, including popular treatments like Ozempic and Wegovy, commonly used for type 2 diabetes and overweight management.
This measure, slated to take effect in 2027, was influenced by the direct price negotiation program initially driven by the Inflation Reduction Act (IRA), enacted by the Joe Biden administration in 2022.
According to CMS, these price cuts are projected to save an estimated $685 million in out-of-pocket expenses for program affiliates, plus a federal savings of $12 billion if the new prices had been in place in 2024.
Impact of the "Most Favored Nation" Policy on U.S. Drug Prices
What is the "Most Favored Nation" policy?
The "Most Favored Nation" policy is a pricing strategy introduced by President Trump that aims to lower drug costs in the U.S. by aligning them with the lowest prices paid by other developed countries.
Which pharmaceutical companies are involved in the agreement?
The agreement includes major pharmaceutical companies such as Pfizer, Amgen, Novartis, Merck, Sanofi, and Bristol Myers Squibb.
How much could Medicaid beneficiaries save under this policy?
Medicaid beneficiaries could see discounts of up to 70% on medications as a result of this policy.