US to cut Rx drug price; no impact on generics
The US president Donald Trump signed an “Executive Order” (EO) to bring the prices for prescription (Rx) drugs in line with other developed nations. The EO institutes the “Most-Favoured-Nation (MFN)” price model (international reference pricing for prescription drugs) for drugs as a ceiling which means the US will pay for drugs at same levels as the lowest paid by other countries. This time MFN model has expanded its coverage for both Medicare and Medicaid (earlier in 2020, it was only for Medicare). This came after yesterday’s indication by Donald Trump to reduce Rx by 30-80% after the studies published by HHS on drug price difference (in Feb’24), which highlighted that overall US prices were 277% of the other countries in which US drug brands were 422% and top60 brands were 504% of the other countries, while generics were only 67% of these countries. However, several things are still unclear such as which drugs, companies, and comparably developed nations. Moreover, within 30 days, officials need to communicate MFN price targets to pharma manufacturers to bring prices in line with comparably developed nations. The policy also intends to bypass middlemen (PBMs) by establishing a mechanism through which American patients can buy their drugs directly from manufacturers at an MFN price. The EO will take additional action to lower drug prices, including by providing massive discounts to low-income patients for lifesaving medicines, facilitating importation programs, and increasing the availability of generic and biosimilar medicines. The EO is likely to face legal challenges from the pharma companies once again (erstwhile MFN was legally blocked in 2020- 21). In our view, the generic companies are unlikely to have any impact. Moreover, Sun Pharma with its specialty business (15-18% of sales) in the US may see some impact of MFN price ceiling for a few of its products like Ilumya, Winlevi, Odomzo, Cequa, which are marketed in other developed markets, whereas Sun’s other products like Levulan, Absorica, Bromsite, Xelpros, Yonsa, Sezaby, Sprinkle portfolio, and the recently-approved Leqselvi (Deuruxolitinib) are marketed only in the US.
Establishing Most-Favoured-Nation Pricing
▪ Within 30 days, the Secretary shall, in coordination with the Assistant to the President for Domestic Policy, the Administrator for the Centres for Medicare and Medicaid Services, and other relevant executive department and agency officials, communicate MFN targets to pharma manufacturers to bring prices in line with comparably developed nations.
If significant progress is not made to the extent consistent with law
▪ the Secretary shall propose a rulemaking plan to impose MFN pricing;
▪ the Secretary shall consider certification to the Congress that importation will pose no additional risk to the public’s health and safety and result in a significant reduction in the cost of prescription drugs under which waivers will be granted to import Rx drugs on a case-by-case basis;
▪ the authority to the extent consistent with law, undertake enforcement action against any anti-competitive practices identified;
▪ the Secretary of Commerce shall review and consider all necessary action regarding the export of pharma drugs or precursor material that may be fuelling the global price discrimination; and
▪ the Commissioner of Food and Drugs shall review and potentially modify or revoke approvals for those drugs that may be unsafe, ineffective, or improperly marketed
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