Drugmakers will be expected to commit to aligning U.S. prices with the lowest price set in a group of peer nations for all brand products across all markets that do not currently have generic or biosimilar competition.
The Department of Health and Human Services has issued a small but important detail in its plan to lower drug pricing. In a brief press release Tuesday morning, the agency explained that “most favored nation” drug pricing would be implemented by pegging drug prices to the lowest price in certain countries with a GDP at least 60% of the U.S. The effort will also focus on branded drugs.
Specifically, drugs will be priced based on Organization for Economic Cooperation and Development nations, which include Canada and Europe. Drugmakers will be expected to commit to aligning U.S. prices for all brand products across all markets that do not currently have generic or biosimilar competition with the lowest price set in these peer nations.
HHS Secretary Robert F. Kennedy was directed by President Donald Trump last week to “set clear targets” for reducing drug pricing in a sweeping executive order. The Tuesday release from the agency does not go that far but does provide at least a framework for what drugmakers can expect. RFK Jr. and his Centers for Medicare and Medicaid chief Mehmet Oz have reportedly “identified specific targets pharmaceutical manufacturers are expected to meet to satisfy the requirements of the executive order.”
“We expect pharmaceutical manufacturers to fulfill their commitment to lower prices for American patients, or we will take action to ensure they do,” RFK Jr. said in a statement.
The latest details also confirm that the Trump administration is going after branded drugs. Analysts were split on whether these revenue-generating assets would be the focus or if HHS would tailor its action toward more common generic medicines.
The industry has pushed back against efforts to change prices in the U.S., arguing that innovation will be impacted. HHS said the targets “will drastically bring down U.S. drug prices . . . while preserving innovation by simply ensuring that Americans bear no greater burden than patients receiving the same drugs in other countries.”
A list of drugs or drugmakers subject to the order was not provided.
