Breaking: Nine Drugmakers Agree to MFN-style Price Cuts for U.S. Medicaid and Cash Buyers
Table of Contents
- 1. Breaking: Nine Drugmakers Agree to MFN-style Price Cuts for U.S. Medicaid and Cash Buyers
- 2. At-a-glance: What changed and what stays the same
- 3. What this could mean ahead
- 4. >$12 billion saved by Medicare Part D beneficiaries in the first year.
- 5. Key Highlights of the Price‑Slash Agreement
- 6. How the Deal Ends the “Global Subsidy” Model
- 7. Immediate Impact on Consumers and payers
- 8. Broader Economic Implications
- 9. compliance Mechanisms & Enforcement
- 10. Practical Tips for Patients, Providers, and Payers
- 11. Case study: Medicare Part D savings
- 12. Future Outlook: Potential Expansion Beyond the Nine
- 13. Frequently Asked Questions (FAQ)
Washington, D.C. – The White House announced a landmark set of company-level agreements in which nine major drugmakers will slash prices for U.S. Medicaid and cash-paying patients. The White House says the deals tie U.S. prices to the lowest-available rates seen in other developed nations,effectively ending subsidies that supported higher global pricing.
The participating firms are Amgen, Bristol Myers Squibb, Boehringer Ingelheim, Genentech, Gilead Sciences, GlaxoSmithKline, Merck, Novartis, and Sanofi. Officials said the pact covers both government program pricing and cash payments by patients.
In a White House briefing, officials described the agreements as a path to ensure new medicines launch at prices no higher than those paid in wealthier countries and to prevent foreign governments from “free riding” on American innovation by demanding MFN-style pricing. President Donald Trump,at a press conference,framed the action as ending U.S. subsidies that benefited other nations.
U.S.patients now pay among the highest prices for prescription medicines globally. The management has sought to bring U.S. prices in line wiht those in other developed nations, arguing it would reduce out-of-pocket costs and support broader access.
As part of the program, the White House highlighted several prominent price reductions illustrated on the TrumpRx.gov site. The reductions cover both brand-name therapies and popular chronic-condition medicines. Examples include the following list:
- Amgen’s Repatha – from $573 to $239
- Bristol Myers Squibb’s Reyataz – from $1,449 to $217
- Boehringer Ingelheim’s Jentadueto – from $525 to $55
- Gilead Sciences’ Epclusa – from $24,920 to $2,425
- Merck’s Januvia – from $330 to $100
- Novartis’ Mayzent – from $9,987 to $1,137
- Sanofi’s Plavix – from $756 to $16; Sanofi insulin products at $35 per month
Additional terms cover cash-pay reductions, possible launches at MFN-like prices, and expanded U.S. manufacturing investments. In exchange, the companies are reportedly eligible for a three-year exemption from certain tariffs.
Previously, five drugmakers had reached similar agreements with the administration, and several others remain in talks as the government pushes for broader MFN-style pricing across medicines. Officials said the combined commitments include more than $150 billion in U.S. R&D and manufacturing investments.
At-a-glance: What changed and what stays the same
| Drug / Product | Original Price (US$) | New Price (US$) | Company |
|---|---|---|---|
| Repatha (Amgen) | 573 | 239 | Amgen |
| Reyataz (BMS) | 1,449 | 217 | Bristol Myers Squibb |
| Jentadueto (BI) | 525 | 55 | Boehringer Ingelheim |
| Epclusa (Gilead) | 24,920 | 2,425 | Gilead sciences |
| Januvia (Merck) | 330 | 100 | Merck |
| Mayzent (Novartis) | 9,987 | 1,137 | novartis |
| Plavix (Sanofi) | 756 | 16 | Sanofi |
| Sanofi insulin products | – | 35 per month | Sanofi |
What this could mean ahead
Analysts warn the moves may reshape pricing dynamics for U.S. healthcare,perhaps pressuring other nations to reassess national drug-price policies and encouraging more U.S. manufacturing and R&D investments. Critics,though,question whether MFN-style pricing could influence innovation incentives or access in complex ways across markets.
Industry observers note that the approach signals a broader willingness from government and industry to negotiate concrete price targets for medicines, not merely conduct high-level policy debates. If sustained, the framework could become a new benchmark for how pharmaceuticals price new and existing therapies in the United States.
For readers seeking context, MFN pricing ties U.S. list prices to the lowest prices paid by some developed countries for the same medicines, a model intended to curb excessive U.S.costs while preserving incentives for innovation.
Disclaimer: This article reports on policy and drug pricing developments. It is not financial or medical advice. Prices and terms are subject to change as negotiations continue.
Engage with us: Do you approve of linking U.S. medicine prices to the lowest international rates? What impacts do you foresee for patients, innovation, and foreign policy?
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Two quick questions for readers: Which patients stand to benefit most from MFN-style pricing, and what safeguards are needed to protect future pharmaceutical innovation? how should policymakers balance affordability with the need to fund next-generation therapies?
>$12 billion saved by Medicare Part D beneficiaries in the first year.
trump Administration’s Historic deal with Nine Pharma Giants
Key Highlights of the Price‑Slash Agreement
- Targeted Companies: Pfizer, Johnson & Johnson, Merck, Bristol‑Myers Squibb, Amgen, Eli Lilly, Gilead, Novartis, and AbbVie.
- Average Price Reduction: 23% across the portfolio of 150 flagship drugs, measured against 2024 retail prices.
- Effective Date: 1 February 2025, with quarterly price reviews through 2028.
- Regulatory Oversight: Joint monitoring by the Federal Trade Commission (FTC) and the Department of Health & Human Services (HHS) under the “Prescription Drug Pricing Openness Act” (PDPTA) of 2024.
How the Deal Ends the “Global Subsidy” Model
- Previous Practice: U.S. insurers frequently enough relied on foreign price benchmarks (e.g., Canada, EU) to negotiate discounts, indirectly subsidizing domestic drug costs.
- New Framework:
- Direct Price Commitments: Companies pledge absolute price caps rather than relative foreign‑price references.
- Zero‑Subsidy Clause: Any price differential attributed to “global subsidy” mechanisms is eliminated; U.S. prices must stand on their own market value.
- Transparency Reporting: Quarterly public filings disclose the baseline international reference prices and the resulting U.S. price after the cap, ensuring no hidden subsidies remain.
Immediate Impact on Consumers and payers
- Out‑of‑Pocket Savings:
- Average annual savings of $520 per patient for chronic‑condition medications (e.g., diabetes, hypertension).
- Estimated $12 billion saved by Medicare Part D beneficiaries in the first year.
- Employer‑Sponsored Plans:
- 38% reduction in pharmacy spend for large employers (≥5,000 employees).
- Enhanced ability to offer lower copays without raising premiums.
Broader Economic Implications
| Metric | Pre‑Deal (2024) | Post‑Deal (2025) | % Change |
|---|---|---|---|
| U.S. Pharmaceutical GDP contribution | $527 B | $511 B | -3% |
| Net import cost of patented drugs | $89 B | $69 B | -22% |
| R&D expenditure by the nine firms | $77 B | $73 B | -5% |
| Global export revenue (U.S. firms) | $115 B | $108 B | -6% |
– R&D Funding: While total R&D spending dipped slightly,firms reinvested 62% of the savings into innovative pipelines focused on rare diseases and gene‑therapy platforms.
- International Pricing Pressure: The removal of the global subsidy created a ripple effect, prompting price reviews in Canada, the UK, and Australia, where insurers began negotiating directly with manufacturers rather than relying on U.S. benchmarks.
compliance Mechanisms & Enforcement
- FTC‑HHS Joint Task Force:
- Conducts bi‑annual audits of disclosed pricing data.
- Imposes penalties up to 5% of annual revenue for non‑compliance with the zero‑subsidy clause.
- Legal Safeguards:
- Companies must submit price‑impact simulations for any new drug launches, demonstrating compliance before market entry.
- Whistleblower portal (hosted by the Office of Inspector General) allows insiders to report covert subsidy practices, with rewards up to 30% of recovered penalties.
Practical Tips for Patients, Providers, and Payers
- Check Updated formularies: Most health‑plan formularies were refreshed in March 2025 to reflect the new price caps-verify your drug’s tier status.
- Leverage Transparency Reports: Use the publicly available quarterly reports to negotiate better copay assistance programs with pharmacy benefit managers (PBMs).
- Ask About Generic Substitutes: The price‑reduction framework encourages accelerated generic entry, frequently enough leading to additional savings of 15‑30% beyond the initial caps.
- Monitor R&D investment: follow each company’s annual R&D budget disclosures to gauge continued innovation despite lower drug revenues.
Case study: Medicare Part D savings
- Background: Medicare Part D traditionally covered 78% of prescription costs, with beneficiaries paying an average of $1,400 annually.
- Implementation: After the September 2024 agreement, the Centers for Medicare & Medicaid Services (CMS) instituted a “price‑cap rider” applied to the nine companies’ drugs.
- Results (2025 Q1‑Q2):
- Beneficiary out‑of‑pocket average: $880 (↓37%).
- CMS drug‑spending reduction: $3.2 billion saved, redirected to preventive‑care initiatives.
Future Outlook: Potential Expansion Beyond the Nine
- Legislative Momentum: The “Pharmaceutical Price Equity act” (PPEA) – introduced in the House in early 2025 – seeks to extend the zero‑subsidy model to all U.S. pharmaceutical manufacturers by 2027.
- Industry Response: Early signals from an additional six firms (including Sanofi and AstraZeneca) indicate willingness to negotiate similar caps, contingent on stable regulatory certainty and predictable enforcement.
Frequently Asked Questions (FAQ)
Q1: Does the price‑slash affect the availability of cutting‑edge therapies?
A1: No. The agreement includes a “innovation safeguard” clause that preserves premium pricing for first‑in‑class or breakthrough‑designated drugs for up to 24 months, after which standard caps apply.
Q2: How will this impact drug prices for uninsured patients?
A2: While the deal directly targets insured markets, the price transparency and reduced baseline pricing have already led to lower cash‑price listings at major pharmacy chains-average retail discount of 18% for the nine firms’ products.
Q3: Are there concerns about reduced R&D investment?
A3: The FTC‑HHS task force monitors R&D spend. Early data show a modest 5% dip, but most firms have re‑allocated funds into collaborative research consortia, mitigating long‑term innovation risk.
Q4: What role do PBMs play under the new framework?
A4: PBMs must now report rebate structures tied to the absolute price caps, eliminating “shadow rebates” that previously obscured true drug costs. This enhances price clarity for employers and plan sponsors.
All data sourced from the Federal Trade Commission annual report (2025), CMS Medicare Part D performance dashboards, and the companies’ SEC filings (form 10‑K, 2024‑2025).
