Trump Expected to Release "Most Favored Nation" Rule on Drug Pricing Today

November 20, 2020

After many delays, Trump is expected to issue the “most-favored nations” interim final rule on drug pricing.  The move would link government payments for medicines to lower prices paid by other developed nations.  He is also expected to introduce a separate interim final rule on eliminating drug rebates as the House passed 10 bills on drug pricing this week.

The rule could significantly increase the prices employer plans pay for drugs.  While the interim final most-favored nations (MFN) rule does not directly impact commercial drug prices, the pharmacy supply chain may increase costs on private payers as it seeks to offset the lower prices paid by Medicare.

Both rules are likely to be challenged in court.  The Pharmaceutical Research and Manufacturers of America previously called the MFN rule “irresponsible and unworkable” and many congressional Republicans oppose the proposal as a form of “price control.”

President-Elect Biden’s health care plan also supports an MFN drug pricing scheme for Medicare that is similar to President Trump’s proposed rule.

Separate rule to eliminate rebates may also be introduced.  A rule to eliminate the rebates drugmakers pay to pharmacy benefit managers may also be issued before President Trump leaves office.

The House passed a set of 10 bipartisan health care bills this week, including legislation to support new research on health disparities, improve food and drug labeling, increase funding to combat the opioid epidemic, and others.

Outlook:  There are questions around whether the MFN rule can survive court challenges and whether an incoming Biden administration would vigorously defend the rule.