President Donald Trump has announced he will sign an executive order to pursue what is known as 'most favoured nation' pharmaceutical pricing, a form of international reference pricing.
In a social media post, President Trump said other countries pay 30 to 80 per cent less than the US.
It is unclear how it would work, given that the US market comprises a mix of government and private payers. The Trump Administration has focused on domestic policy mechanisms to lower pharmaceutical pricing, evidenced by the vague wording of its bilateral trade agreement with the UK.
"They will rise throughout the World in order to equalize and, for the first time in many years, bring FAIRNESS TO AMERICA!" said President Trump. "I will be instituting a MOST FAVORED NATION’S POLICY whereby the United States will pay the same price as the Nation that pays the lowest price anywhere in the World," he added.
President Trump announced a 'most favoured nation' pharmaceutical pricing policy as one of the final acts of his first term.
A phased implementation of the policy was planned to begin on 1 January 2021 with the introduction of a form of international reference pricing for medicines funded through the US government's Medicare Part B program.
The industry challenged the policy, which a judge in the US District Court for the Northern District of California ultimately blocked.
The Biden Administration did not proceed with the policy. It introduced a price negotiation power through the Inflation Reduction Act.
It might be hard for countries like Australia to criticise the US over a 'most favoured nation' pharmaceutical pricing policy, with the risk of being accused of hypocrisy. Australian government officials consistently argue for the lowest global price for a PBS listing, or that companies should supply products at cost, and then boast about the system's ability to negotiate low reimbursement prices.
These low prices are effectively hidden under special pricing and risk share arrangements. PBS reimbursement prices of new medicines could be more than 50 per cent lower than the published price. The risk of international reference pricing is partly the rationale for special pricing arrangements. The policy could be adjusted to accommodate for the impact of any new US policy, as it is for the many countries that use a form of international reference pricing.
If it's acceptable for the Australian or any government to use its market dominance to secure the lowest possible pharmaceutical prices, why shouldn't the US? It will just need to be managed.
