MFN Executive Order Webinar: Inside Trump’s Drug Price Plan

In the third entry of Pharmacuetical Executive’s premium webinar series examining the impact of President Trump’s MFN executive order, our experts discuss how the order could be operationalized alongside new channels and potential tariffs.

Ronald W. Lanton III Esq. moderated the panel, which included the following participants:

• Neal Masia, PhD – Co-founder and CEO at EntityRisk, Inc.
• Stacie B. Dusetzina, PhD – Professor at Vanderbilt University School of Medicine
• Lindsey Greenleaf, JD, MBA – Head of policy, research, and analysis at ADVI Health

Click here to access the entire webcast!

Lanton: Is MFN fundamentally a political negotiating tactic, or does it contain the structural components needed to become a permanent, long-term price reform?
Greenleaf: MFN as a concept is certainly here to stay, especially during the Trump administration. If we have another Republican president come on the heels of President Trump, it’ll likely stay.

Where things may get a little different is if Trump is followed by a Democrat in the White House. That party is less focused on this idea of international fairness and who's funding this American fueled innovation.

They're more focused on things like the IRA and government price setting generally as a concept, and less about this international reference pricing concept that we have under Trump.

Obviously, we're looking at Congress for legislative changes. What's in front of us right now is more of an administrative focus, and we're looking at what President Trump can and might do using his administrative authority.

Of course, before we get to that, we're looking at these voluntary agreements that are playing out. If we get enough of those for manufacturers in the near term here, maybe we won't ever see any formal proposal come out of the Trump administration using that administrative authority.

That's a concept we'll be talking about for 2028 and then, depending on who's in the White House, this might not be a topic that's going away anytime soon.

Lanton: Assuming MFN creates a reference price floor in Medicare, how does that economically compress commercial payer negotiations?
Masia: The monster in the horror movie is always scarier when it's hidden. I think they're going to take a very long time (if ever) to roll out the formal rules.

And then, when they are rolled out, it'll be quite an adventure to sort through them. Also, who knows if any of that will ever be formalized? I question whether they'll really create a floor in Medicare in any formal sense.

The harder you push on that, the less likely it is to be effective. There are people who are smart in the administration who understand that if you try to set a benchmark that's too low, then there's a very simple solution for the companies, which is don't launch in those countries.

There's an inherent limit that’s probably equal to the average net price difference between the US net price and the net price in these other countries. That's probably a 15-to-20% range.

The bigger issue right now is that on the commercial side, there's a lot of interconnecting parts. We haven't said 340 B yet, but, the one area where the administration has been able to get some commitments at least from a couple of companies is to set a certain price in Medicaid.

Essentially, the MFN will apply to Medicaid, which is an easy thing to do when you're already giving an 80 or 100% discount in Medicaid. CMS actually doesn't really know what Medicaid pays at a state level, because they don't have access, necessarily to the product level supplemental discounts that are negotiated.

The way to think about this is that clearly the companies have gotten the message that they’d better come up with something, make it public, and show that you did this because the administration made you. Whether it's MFN or just the threat of MFN, the reality is there will be some impact.

Lanton: If tariffs on foreign manufacturer branded drugs were implemented, what is the most immediate impact on patient care in terms of access to care: delayed treatment or cost?
Dusetzina: This feels like a discussion about what might actually happen, versus what is threatened to be happening. But, if we take this to its limit, let's say a branded product has 100% tariff applied to it. Companies will be looking at their competitors to see if they have a tariff applied to them or not.

Then these companies are going to be thinking about where the leverage is on whether they can pass along those price increases to plans. That ultimately comes down to the beneficiary.

If the price increase goes through to the plan, it's coming through to the beneficiary, eventually in higher cost sharing and higher premiums. It really boils down to competition. If my key competitor has a tariff, and I don't, that’s great.

However, as we've seen across the board, with tariffs applied to all kinds of goods and services in the US this year, that usually means the customer in the US is going to end up picking up the tab on that. And again, we all know how this works in healthcare. It gets into our health insurance premiums.