- A new modelling study examining the Trump administration's proposed 'Most-Favoured-Nation' pricing models suggests the new policies could reshape pharmaceutical markets worldwide by requiring pharmaceutical companies to pay additional rebates when Medicare prices for these drugs exceed the prices charged in comparable high-income countries.
- For three in four medicines studied, the cut in estimated Medicare savings from benchmarking to a lower price was larger than the medicine's total annual sales in the reference country. To avoid losing that much revenue, manufacturers would have a strong incentive to raise prices outside the United States or delay launches.
- Separately, multiple manufacturers are reported to have struck confidential deals with the Trump administration. If the medicines for the initial group of 17 manufacturers with deals are excluded from those rules, the researchers estimate the policy's potential savings would be cut by 71%.
- Without these exemptions, the researchers estimate that the administration’s Most-Favoured-Nation pricing models could cut Medicare spending by 16% for medicines provided in hospitals and clinics and 18% for medicines purchased at pharmacies.
For about three in four medicines studied, the resulting Medicare savings would be worth almost four times that medicine's entire annual sales in the country used to set its price, potentially giving manufacturers a strong incentive to change how they price and launch products outside the USA.
The policy could cut Medicare's prescription drug spending by $5.2 billion (16%) under GLOBE, which covers medicines given in hospitals and clinics, and $6.4 billion (18%) under GUARD, which covers medicines bought at the pharmacy [2], in its initial phase, which would cover about 25% of the Medicare programme. These savings could rise to an estimated $21 billion under GLOBE and $25.5 billion under GUARD if expanded to all Medicare beneficiaries. But the study estimates that reported confidential deals between manufacturers and the Trump administration [3] could cut the policy's overall Medicare savings: for the initial group of 17 manufacturers with announced agreements, the study’s projected savings would be cut by 71%.
Medicare is the US government health insurance programme covering around 68 million older and disabled people living in the USA. It was historically barred from negotiating medicine prices directly with manufacturers until the 2022 Inflation Reduction Act authorised it to negotiate prices for a small number of costly medicines [4]. The Trump administration's new 'Most-Favoured-Nation' policy goes further, aligning what Medicare pays for brand-name medicines with prices in comparable high-income countries, adjusted for purchasing power. Under the GLOBE and GUARD pricing models, a randomly selected 25% of Medicare beneficiaries would be covered over a five-year period.
Because both pricing models tie what Medicare pays to prices charged in other countries, they could also reshape drug pricing and market strategy outside the USA, as manufacturers respond to the new US benchmarks.
“The Trump administration’s Most-Favoured-Nation pricing models have the potential to deliver real savings to the US federal government and taxpayers. But if manufacturers can evade participation in these models by striking side deals, most of those savings might not be realised,” said Prof. Thomas Hwang of Brigham and Women’s Hospital and lead author of the study.
“People living in the United States have long paid more for medicines than virtually anywhere else in the world. The Most-Favoured-Nation pricing models were meant to address this gap, but their scope is limited by various exemptions and will likely face legal challenges,” added study author Prof. Aaron Kesselheim of Brigham and Women’s Hospital (USA).
Researchers analysed 195 patented medicines that together account for $87.9 billion of Medicare's annual spending ($32.7 billion through GLOBE and $55.2 billion through GUARD). Because manufacturers' actual rebates and discounts are confidential, the researchers estimated Medicare's actual ('net') prices for these medicines. They then compared these net prices with prices in the 19 reference countries under the proposed rules [5] to estimate how much Medicare could save. The researchers also modelled two changes to the policy: expanding the rules to cover all Medicare beneficiaries instead of the current 25% and excluding manufacturers with confidential deals.
Without any exemptions, the researchers estimate Medicare could save $5.2 billion (16%) under GLOBE and $6.4 billion (18%) under GUARD during its initial phase. Expanding the rules to cover all Medicare beneficiaries could raise these savings to $21 billion and $25.5 billion. Under these payment models, the lowest price used as an international benchmark was found to be 71% lower than what Medicare pays, with South Korea, Norway, and Australia as the most common countries referenced by Medicare to set pricing.
The study also suggests that among the 138 medicines with available sales data, the estimated cut to Medicare spending was about 3.8 times bigger than that medicine's total annual sales in the country used to set its US reference price. In addition, for about 73% of these medicines (101 of 138), the estimated cut would exceed the medicine's entire annual sales there. For most of these medicines, keeping prices low in other countries would cost manufacturers more in lost Medicare revenue than they earn from selling there, creating a strong incentive to raise prices or block them from being visible to Medicare for referencing. Manufacturers could try to do that by developing different formulations, converting existing discounts into confidential rebates, or delaying launches.
“Policies in the US may impact access to medicines globally. Policymakers should ensure that availability of important medicines is not delayed as a result,” said study author Prof. Kerstin Vokinger of ETH Zurich and University of Zurich (Switzerland).
“Referenced countries, from Germany to Japan to Australia, are facing substantial pressure from the US administration and industry to raise prices and spending on medicines,” added Prof. Hwang. “But this is colliding with the reality that other countries have limited budget room to give.”
An initial group of 17 pharmaceutical companies struck separate, confidential deals with the Trump administration that reportedly include exemptions from Medicare's GLOBE and GUARD rules. These companies account for 131 of the 195 medicines studied (67%). If those medicines were excluded from the pricing rules, the researchers estimate the potential savings would shrink by 71%, leaving just $3.3 billion (28.7%) in savings ($0.9 billion under GLOBE and $2.4 billion under GUARD).
“The latest round of deals [6] announced on 31 August brings the reported tally to 26 companies. By our updated estimate, exemptions would push savings lost from an estimated 71% in our study to nearly 80%. Because these deals aren’t public, it is challenging for policymakers and the public to judge whether Most-Favoured-Nation pricing is delivering what was promised,” said Prof. Hwang.
The authors note some study limitations. The estimates rely on modelled Medicare net prices and on international prices drawn from public databases, which may not reflect other countries' confidential discounts. The medicine list, based on historical Medicare data, may not capture newly approved medicines or future policy changes. Finally, the data presented in this study are estimates and cannot predict how manufacturers or insurers will respond to the new rules in practice, including whether manufacturers will change their launch or pricing plans in reference countries.
The study's findings were presented at the Nordic Pharmaceutical Forum Summit https://nordicpharmaceuticalforum.com
This study was funded by Arnold Ventures. A full list of authors and their institutions is available in the paper.
Hwang TJ, Hediger S, Krishnan A, Cai CL, Kesselheim AS, Vokinger KN.
Most-favoured-nation pricing for prescription drugs in US Medicare: a cohort study.
Lancet. 2026 Oct 3;408(10562):1337-1345. doi: 10.1016/S0140-6736(26)01555-2
1. https://www.whitehouse.gov/research/2026/05/savings-from-most-favoured-nation-drug-pricing-policy/
2. GLOBE = Global Benchmark for Efficient Drug Pricing; GUARD = Guarding US Medicare Against Rising Drug Costs. Both are MFN pricing models under the current US administration's executive order on Medicare medicine pricing.
3. As of June 2026, the 17 companies with reported Most-Favoured-Nation agreements with the Trump administration were: AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly, EMD Serono (Merck KGaA), Gilead, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron, Roche/Genentech, and Sanofi. These agreements are confidential: https://www.whitehouse.gov/fact-sheets/2026/04/fact-sheet-president-donald-j-trump-announces-deal-with-regeneron-to-bring-most-favoured-nation-pricing-to-american-patients/
4. https://www.irs.gov/inflation-reduction-act-of-2022
5. The 19 reference countries in the GLOBE and GUARD models include: Australia, Austria, Belgium, Canada, Czechia, Denmark, France, Germany, Ireland, Israel, Italy, Japan, Netherlands, Norway, South Korea, Spain, Sweden, Switzerland, and the United Kingdom.
6. https://www.whitehouse.gov/fact-sheets/2026/08/fact-sheet-president-donald-j-trump-announces-deal-with-nine-additional-pharmaceutical-manufacturers-to-lower-drug-prices-for-americans/