As pharmaceutical import tariffs take shape in Europe, President Donald Trump is rounding out the week by spotlighting another one of his biggest industry bugbears: drug pricing.
Still, the latest move by the President to implement so-called “Most Favored Nation” (MFN) drug pricing—which seeks to match the costs of prescription drugs in the U.S. to the lowest price offered in other developed nations—may be more bark than bite, according to at least one group of analysts.
On Thursday, Trump sent letters to 17 of the world’s largest drugmakers outlining steps they “must take” to moderate the costs of their U.S. medicines in line with international reference prices.
The letter calls for the companies to provide MFN prices to “every single Medicaid patient” and pledge not to offer “better prices for new drugs than prices offered in the United States” when striking deals with other developed nations.
Trump also urged the drugmakers to look for ways to cut out pharmacy benefit managers (PBMs) and sell their products directly to patients, so long as they don’t do so at a higher cost than the best price available in the applicable reference countries.
According to the text of the letter, if the targeted pharma companies “refuse to step up,” the federal government “will deploy every tool in our arsenal to protect American families from continued abusive drug pricing practices,” the White House noted in a fact sheet issued Thursday.
The 17 drugmakers who received letters are: AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Eli Lilly, Merck KGaA’s EMD Serono, Roche’s Genentech, Gilead, GSK, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron and Sanofi.
After failing to implement MFN pricing during his first term, Trump on May 12 made a second go at the strategy, inking an executive order aiming to cut the price of drugs in the U.S. by up to 90% through an MFN policy. The order included a 180-day period during which drugmakers could negotiate with the Department of Health and Human Services (HHS) over the policy.
The letters were subsequently shipped out Thursday because “industry proposals have fallen short,” the White House fact sheet states.
“[F]rom this point forward, President Trump will only accept from drug manufacturers a commitment that provides American families immediate relief from vastly inflated drug prices and an end to the freeriding by European and other developed nations on American innovations,” the fact sheet continues.
While the language in the MFN missive is aggressive, the actual threat it poses to Big Pharmas may be limited.
The letter is “likely more public display of political pressure than a warning of definitive legislative action,” analysts at Citi Research wrote in a note to clients Thursday.
The Citi team warned against “knee-jerk reactions given the limited scope of the President’s power, especially without Congressional approval.”
And while the letters impose a 60-day deadline for the recipient companies to respond, the Trump administration hasn’t had a great track record sticking to its own time limits, the Citi team noted, highlighting as an example the frequent goalpost pushing on the timing of pharmaceutical import tariffs.
“Ultimately, we view this move as increasing negotiation pressure on the sector for concessions,” the analysts concluded.
As for how the drugmakers are responding, Novo Nordisk said that it “remains focused on improving patient access and affordability.” The company “will continue to work to find solutions that help people access the medication they need,” a Novo spokesperson told Fierce Pharma over email.
Novartis, for its part, said in an emailed statement that it is “reviewing the letter.”
“We remain committed to finding ways to improve access and affordability for patients,” the statement continued.
Genentech is also in the process of reviewing the letter, a company spokesperson told Fierce.
Pfizer, meanwhile, said over email that discussions with the administration have been “productive.”
“Pfizer is working closely with the Trump Administration and Congress on solutions that will increase access and affordability for American patients and enhance the power of the biopharmaceutical innovation ecosystem in the United States,” the company said.
EMD Serono, the healthcare arm of Germany’s Merck KGaA, said the company is “open to a collaborative effort, together with the U.S. Government, to ensure access and pricing that represent the clinical benefit for patients and overall value to the U.S. healthcare system that we provide.”
AbbVie also stressed its commitment to affordability and access for patients and said it looks forward to working with the President on the matter.
“We're optimistic that our proposed solutions can meet the Administration’s goals without sacrificing our ability to advance future medical breakthroughs for patients and maintain U.S. leadership in innovation,” an AbbVie spokesperson said over email.
Spokespeople at Eli Lilly, GSK, Boehringer Ingelheim and AstraZeneca declined to comment on the MFN dispatch.
Fierce Pharma has reached out to all 17 companies who received the White House communique, though some had not responded by publication time.
Prominent U.S. trade group the Pharmaceutical Research and Manufacturers of America (PhRMA), whose CEO pushed back on MFN pricing in May, stuck to its position Thursday.
“Importing foreign price controls would undermine American leadership, hurting patients and workers,” the organization’s SVP, Alex Schriver, said in a statement.
“To reduce price differentials with other countries, policymakers should rein in health care middlemen driving up costs for Americans and get foreign countries to pay their fair share for innovative medicines,” Schriver continued, warning that the U.S. can’t afford to lose its biopharma edge over China.
Elsewhere, PBM group the Pharmaceutical Care Management Association (PCMA) seemed to come out in support of the MFN move.
“America's pharmacy benefit managers support lower prices for every prescription drug for every patient and have called on drug companies to lower list prices to make medicines more affordable,” the association said in a statement. In turn, PBMs “stand ready” to implement lower drug prices in their health plans
The MFN update comes as another major facet of Trumps’ trade policy—import tariffs—have finally materialized for the industry. In a trade deal reached Sunday, the U.S. will now impose 15% tariffs on many goods—including pharmaceuticals—entering the country from the European Union.
Those tariffs aren’t expected to kick in, however, until the results of the U.S.’ Section 232 investigation into the national security implications of pharmaceutical imports are in. The results of that probe are expected to be delivered in August.
Much uncertainty still surrounds the 15% tariff rate and how the results of the 232 investigation could influence it, with that sense of ambiguity echoed by Sanofi CEO Paul Hudson on the company’s second-quarter earnings call earlier Thursday morning.
“Tariffs, once they are established and we know them—an important step—then we’ll know what the relationship is like with the other two components and know whether it’s a 15% tariff with a caveat, or 15-plus or 15-less,” Hudson said.
The “other two components” the CEO was referring to were the potential 232 tariffs and MFN drug pricing.