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**Trump Administration May Resurrect Most Favored Nation Model to Lower Drug Prices**
The Trump administration is reportedly considering reviving the “most favored nation” model to lower prescription drug prices in the Medicare program. This move comes as a surprise, given that previous attempts to implement such a policy were blocked by courts.
In 2018 and 2020, the Department of Health and Human Services proposed methods to reduce Medicare prescription drug spending by tying prices of physician-administered drugs to those in other comparably wealthy countries. However, these efforts were met with legal challenges and ultimately failed.
Despite this setback, there is still a possibility that the administration could leverage existing legislation or executive actions to pursue international price referencing for certain prescription medications. This approach would involve capping what healthcare providers can be paid based on prices in other countries with similar gross domestic product per capita.
While proponents argue that such a model could lead to significant cost savings for the Medicare program, opponents are likely to raise concerns about logistical and legal challenges. One major issue is how to handle prescription drugs that have not been approved or reimbursed in other countries. Additionally, there may be difficulties in establishing reliable price benchmarks due to varying levels of transparency among foreign nations.
Another potential hurdle lies in international pricing disparities, which could lead to significant delays or even withdrawal of certain drug products from the market outside of the United States. Pharmaceutical companies might also respond by re-negotiating contracts with other countries to increase prices, undermining the effectiveness of such a policy.
Critics have also raised concerns that capping payments based on international prices would likely result in lower net prices compared to previous price negotiations under the Inflation Reduction Act. Furthermore, allowing for higher drug prices could undermine the sustainability of universal access to pharmaceuticals in European countries.
While there are valid concerns about the practicality and legality of such a policy, it is worth noting that the Congressional Budget Office previously found that a most favored nation model would yield substantial cost savings for the Medicare program.
As the Trump administration weighs its options to address rising prescription drug costs, it remains to be seen whether any action will be taken.
Source: https://www.forbes.com/sites/joshuacohen/2025/05/03/trump-administration-may-resurrect-most-favored-nation-model-to-lower-drug-prices/
