Key Takeaways
- Nine major pharmaceutical companies have agreed to lower the cost of their prescription drugs in the U.S. to match prices in other developed countries
- The companies will also sell pharmacy-ready medicines on the TrumpRx platform, set to launch in January, allowing people to buy drugs directly from manufacturers
- The drugmakers will donate significant supplies of active pharmaceutical ingredients to a national reserve and formulate and distribute them into medications as needed in an emergency
- The donations include some of the world’s most critical medicines, such as antibiotics, rescue inhalers, and blood thinners
- The agreements aim to increase access to affordable medications for patients, particularly those with low incomes or no insurance coverage
Introduction to the Agreement
The U.S. President Donald Trump recently announced that nine major pharmaceutical companies have agreed to lower the cost of their prescription drugs in the U.S. to match prices in other developed countries. The companies, including Amgen, Bristol Myers Squibb, Boehringer Ingelheim, Genentech, Gilead Sciences, GSK, Merck, Novartis, and Sanofi, will rein in Medicaid drug prices, which will help state budgets that fund the programs. Additionally, new drugs made by these companies will be charged at the "most-favored-nation" pricing across the country, which means that patients will pay the lowest price available in any developed country.
Impact on Patients and State Budgets
The agreement is expected to have a significant impact on patients, particularly those with low incomes or no insurance coverage. Patients in Medicaid already pay a nominal co-payment of a few dollars to fill their prescriptions, but lower prices could help state budgets that fund the programs. Furthermore, patients who have no insurance coverage and little leverage to negotiate better deals on what they pay will also benefit from the lower prices. However, even with steep discounts, patients may still have to pay hundreds of dollars a month for some prescriptions. William Padula, a pharmaceutical and health economics professor at USC, noted that Medicaid already has the most favorable drug rates, so it remains to be seen what other impacts the agreement could have.
Pharmaceutical Companies’ Involvement
The pharmaceutical companies involved in the agreement have also committed to selling pharmacy-ready medicines on the TrumpRx platform, which is set to launch in January. This platform will allow people to buy drugs directly from manufacturers, increasing access to affordable medications. Companies such as Merck, GSK, and Bristol Myers Squibb have also agreed to donate significant supplies of active pharmaceutical ingredients to a national reserve and to formulate and distribute them into medications such as antibiotics, rescue inhalers, and blood thinners as needed in an emergency. The New Jersey-based Bristol Myers Squibb has announced that it will be giving its signature blood thinner, Eliquis, for free to the Medicaid program.
Donations and Health Equity
The donations made by the pharmaceutical companies are a significant step towards health equity, as they acknowledge that the companies can afford to seek profits elsewhere in their operations. Eliquis, which is one of Medicaid’s most widely-used medicines, has already been one of the most profitable drugs ever made. Padula praised the donation, saying it’s a "thoughtful health equity move that they can afford given that it’s been such a blockbuster." The donations include some of the world’s most critical medicines, which will help increase access to affordable medications for patients in need.
Trump Administration’s Efforts
The Trump administration has been working to lower drug prices, and this agreement is a result of those efforts. Trump said he effectively threatened the pharmaceutical companies with 10% tariffs to get them to "do the right thing." The administration has now negotiated lower drug prices with 14 companies since Trump publicly sent letters to executives at 17 pharmaceutical companies about the issue. Other major drugmakers, including Pfizer, AstraZeneca, EMD Serono, Novo Nordisk, and Eli Lilly, struck similar deals with the Trump administration earlier this year.
Conclusion and Future Impacts
The agreement between the Trump administration and the pharmaceutical companies is a significant step towards increasing access to affordable medications for patients. While it is difficult to gauge the full impact of the agreement, it is clear that it will take years to determine its effectiveness. Padula noted that it’s "good for their stock and it’s good for their future" research and development, but the ultimate goal is to improve the health of the country. The agreement is a positive step towards achieving that goal, and it will be important to monitor its progress and impact in the coming years.
