The report stated that the order aims to reduce the cost of prescription medicines in the US by matching them with the prices paid by other developed countries.
It said, “In our view, the generic companies are unlikely to have any impact”.
This executive order introduces the “Most-Favoured-Nation (MFN)” price model. Under this model, the US will not pay more for drugs than the lowest price paid by other developed nations.
Earlier, this pricing model only applied to Medicare in 2020. Now, it has been expanded to cover both Medicare and Medicaid.
The move follows Trump’s earlier statement that the government aims to cut the prices of prescription drugs by 30-80 per cent. This announcement came after the US Department of Health and Human Services (HHS) published a study in February 2024, which showed that drug prices in the US were significantly higher than those in other countries.According to the report, the average drug price in the US was 277 per cent of the international average. For branded drugs, the difference was even higher, US prices were 422 per cent more than other countries, and the top 60 brands were 504 per cent costlier. In contrast, generic drug prices in the US were only 67 per cent of the prices in other developed countries.Despite this, many details of the policy remain unclear, the report noted that it is not yet known which drugs, companies, or countries will be covered under the MFN model. Officials are expected to inform pharmaceutical companies about the target MFN prices within the next 30 days.
The executive order also plans to bypass pharmacy benefit managers (PBMs) by allowing American patients to purchase medicines directly from manufacturers at MFN prices.
Other provisions include heavy discounts for low-income patients on lifesaving drugs, importation programs, and steps to boost the availability of generic and biosimilar medicines.
However, the report also mentioned that the executive order is likely to face legal hurdles. A similar MFN rule introduced in 2020-21 was blocked by courts. Still, the report believes that generic drug companies are unlikely to be impacted by this policy.
