New US Medicare pricing policies could reshape global pharmaceutical markets
A new modeling study published in The Lancet suggests that U.S. Medicare's new "Most-Favored-Nation" pricing policy, which ties what Medicare pays for medicines to prices charged in other high-income countries, could push pharmaceutical manufacturers to raise prices or delay launches. For about three in four medicines studied, the resulting Medicare savings would be worth almost four times that…
A new pricing policy proposed for U.S. Medicare could significantly impact global pharmaceutical markets, according to a modeling study published in The Lancet. The policy, known as the Most-Favored-Nation pricing model, would tie what Medicare pays for medicines to prices charged in other high-income countries, adjusted for purchasing power.
This could put pharmaceutical manufacturers under pressure to raise prices or delay product launches, potentially saving Medicare billions of dollars. Researchers analyzed 195 patented medicines that account for $87.9 billion of Medicare's annual spending, finding that the policy could cut Medicare prescription drug spending by $5.2 billion under the GLOBE model and $6.4 billion under the GUARD model during the initial phase.
However, confidential deals between manufacturers and the Trump administration could diminish these savings, reducing them by 71% for the initial 17 manufacturers with announced agreements. The policy's impact on drug pricing and market strategies outside the U.S. could be substantial, as manufacturers may respond to new U.S. benchmarks by altering formulations, converting discounts into confidential rebates, or delaying launches.
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