Program To Reduce Prescription Drug Costs Is ‘Band-Aid on Exploding Healthcare Costs’ Even as More Drugmakers Join

For decades, the accepted wisdom in American medicine cabinets was simple and largely unquestioned: whatever a prescription costs here, it costs less almost everywhere else. President Trump says he is done accepting that as the price of doing business. Whether he can change the longstanding model, however, is yet to be determined.Standing in the Oval Office on Aug. 31, flanked by pharmaceutical executives, Mr. Trump announced that nine more drugmakers — Alcon, Astellas Pharma, BeOne Medicines, BridgeBio, CSL, Kyowa Kirin, Sun Pharma, Teva Pharmaceuticals, and UCB — had agreed to sell their medications to American patients at prices closer to what Europeans and other developed nations pay. “It’s the largest drug discount, the largest price reductions in the history of medicine,” Mr. Trump said Monday, adding, “I would say that’s pretty big.”The companies join 17 larger manufacturers, including Pfizer, Eli Lilly, and Novo Nordisk, that signed similar agreements over the past year, expanding the “most favored nation” order Mr. Trump signed in May 2025. Together, the White House says, the 26 deals now cover roughly 89 percent of the branded drug market sold in the United States. Mr. Trump has claimed the arrangements will save Americans more than $600 billion.For the roughly nine in 10 Americans who get coverage through an employer or a public program, none of that headline math changes what they pay at the pharmacy counter.“The impact of the program is slight. It’s not nothing, but it affects very few people. If you have regular health insurance, you’re not affected by this ‘most favored nation’ pricing program,” a professor emeritus and past head of the division of medical ethics at NYU Grossman School of Medicine’s department of population health, Arthur Caplan, tells The New York Sun.The administration disputes that characterization.The Department of Health and Human Services senior adviser and chief negotiator of the most-favored-nation deals, Chris Klomp, said at the Aug. 31 event that the pricing push is already showing up in the numbers.“These are real impacts for everyday Americans in their pockets,” Mr. Klomp said. “It’s affordability. It’s the president fighting for affordability.”Unanswered is the question: If insured Americans don’t notice a difference and the uninsured still can’t afford the discount, who is this offer really meant for?Twenty-Six Companies and CountingThe mechanics of a most-favored-nation deal sound simple in theory: a company agrees not to charge Americans more than the lowest price it charges in a comparable wealthy country. In practice, the newest round of agreements applies narrowly.The nine companies that signed on this week make drugs for hemophilia, Parkinson’s disease, macular degeneration, glaucoma, liver disease, skin conditions, and various cancers. As part of their pledges, the companies will offer discounts on outpatient drugs sold through Medicaid programs, as well as comparable pricing on the White House’s direct-to-consumer marketplace, TrumpRx.In exchange, participating manufacturers get a three-year exemption from Section 232 pharmaceutical tariffs, contingent on continued investment in United States manufacturing.That trade-off has proven persuasive. Wall Street barely blinked at the news; shares of most of the nine companies closed roughly flat the day of the announcement, though Teva and BeOne dipped about one percent — an indication that investors view the deals as a manageable cost of avoiding a harsher fight with Washington.There is some relief for those who pay cash for drugs at the pharmacy counter without insurance, but it is limited, according to Dr. Caplan.“If you’re paying out of pocket — if you don’t have health insurance — this helps lower the price. So that part’s correct,” he explains, noting that “most people paying out of pocket can’t afford much even with this. It’s a short-term fix.”In other words, the only Americans who stand to feel this deal in their wallets are the uninsured. Yet, even for them, it barely dents the bill.“It’s really just a Band-Aid on an exploding healthcare cost situation. Costs are up 9 percent this year over last, and that’s 9 percent of an already enormous number,” Dr. Caplan says, pointing to new drugs excluded from the program, climbing hospital costs, and rising labor costs as the real drivers. “It’s unsustainable, and it’s not going to slow that out-of-control inflation.”The Part of the Bill Nobody SeesThe public has not seen the actual text of any of the 26 agreements. Congressional Democrats have pressed the administration and drugmakers for details since at least March, when a wave of oversight letters went out demanding to know how the deals would affect Medicaid spending and patient access.Neither the White House nor manufacturers have released the contracts, and many agreements contain confidentiality clauses that prohibit companies from disclosing the terms.That opacity matters more than it might seem. The 89 percent figure only tells you how much of the market is under contract, it says nothing about what any individual patient actually saves. Under federal rules, most Medicaid patients are already paying just $4 to $8 per prescription. The real money in these discounts lands elsewhere: state budgets and manufacturer margins.Dr. Caplan traces the deeper problem to how America pays for care in the first place.“The U.S., for many years, has had a commitment to market-based insurance delivered through employers,” he explains, noting that Medicare’s administrative overhead runs about 5 percent, compared with an estimated 15 to 20 percent under the multi-payer, employer-based system.The other missing piece, Dr. Caplan says, is that “we’ve never done what the rest of the wealthy world has done — insist that all drugs be negotiated on price.“Trump’s program is a toe in the water. In Germany or Italy, the government negotiates prices for everything, and if they think a pharmaceutical company is charging too much, they don’t buy it — the company loses the business,” he continues. “Here, you can charge whatever you want.”That openness, he surmises, drives up costs across the system, not just for drugs.“It leads to high prices not just for drugs but for hospital charges, medical devices and even our doctors are paid far more than in other countries,” Dr. Caplan says.He attributes the resistance to change to lobbying muscle and an ideological attachment to markets that he says does not hold up in health care, where patients rarely have the information to judge quality. The pharmaceutical and health-product industry alone spent a record $457.3 million lobbying Washington in 2025.Why Medicare Isn’t Invited — YetThe gap that looms largest is Medicare, the program that covers roughly 70 million older and disabled Americans and accounts for a far larger share of national drug spending than Medicaid.The deals announced so far apply chiefly to Medicaid and to the still-nascent TrumpRx platform; they do not reset what Medicare, or the employer-based commercial insurance that covers most working-age Americans, pays for existing prescriptions.The MFN deals require companies to launch new drugs in the United States at the same price they charge in other wealthy countries. However, when STAT News checked in on drugs launching under the earlier round of deals, several were not yet sold anywhere else. So, there was no foreign price to compare against, and no way to confirm the promise was being kept.Rather than leaving the deals to a future president or company’s discretion, Mr. Trump wants them codified into permanent law. Pharmaceutical industry opposition and legislators in both parties who are skeptical of price controls have stymied that push so far.Washington made a similar attempt once before. During Mr. Trump’s first term, a nearly identical Medicare Part B rule was challenged in court within days and struck down in court before it ever took effect.Some health economists warn that the underlying arithmetic has not changed much since then. The long-term savings promised by most-favored-nation deals may prove illusory, analysts note, because manufacturers often raise prices in the same countries used as the pricing benchmark once a deal is signed, quietly raising the comparison point over time.Dr. Caplan is skeptical that Washington is prepared to go beyond piecemeal fixes. He points to a recent suggestion from Dr. Mehmet Oz, the administrator of the Centers for Medicare and Medicaid Services, to raise Medicare eligibility from 65 to 66, and dismisses it as beside the point.“That doesn’t respond to the cost problem at all. You’re still spending the same amount of money, just delivering one less year of eligibility,” he underscores.The trade-off between price and access, Dr. Caplan says, is only getting sharper as expensive new therapies reach the market outside the reach of any of the new agreements. The FDA approved one such drug, Rasonque, in late August for advanced pancreatic cancer; in trials it pushed median survival to 13.2 months, against 6.7 months on standard chemotherapy, roughly six and a half additional months, at a list price near $39,800 a month.“If you can’t afford it, what good is it? Insurance companies aren’t going to pay for it,” Dr. Caplan laments.Whether this round of agreements breaks that cycle, or relocates it, is the question Congress, patients, and the drug industry itself are all still waiting to see answered.For now, no one outside the White House and the drugmakers themselves can check the $600 billion savings claim against the actual contracts, because those contracts have not been made public.

Program To Reduce Prescription Drug Costs Is ‘Band-Aid on Exploding Healthcare Costs’ Even as More Drugmakers Join

Program To Reduce Prescription Drug Costs Is ‘Band-Aid on Exploding Healthcare Costs’ Even as More Drugmakers Join

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