Generic Drugmakers May Avoid Major Impact from Trump Price Cuts

US President Donald Trump’s new price range for Rx drugs with other developed countries might not affect the generic companies in India, reported by HDFC Securities. Based on the report, this order purposes to reduce the cost of prescription medicines in the US, and bring them into line same as in other developed countries.

Under this order, the US will pay less than the lower-priced developed countries. This introduces the “Most- Favoured- Nation” (MFN) price model. This pricing model was applied to Medicare in 2020, but now this has been expanded to cover both Medicare and Medicaid.  

In February 2024, the US Department of Health and Human Services (HHS) published a report showing that drug prices in the US were considerably higher than in other countries. Later, it follows Trump’s previous statement that the government wants to cut down the prices of prescription drugs by 30 to 80 percent.

The report also shows that the average drug price in the US was 277 percent compared to the international price. The difference between branded drugs was even higher, 422 percent more than in other countries. The report mentions that it isn’t clear which drugs, companies, and countries will be covered under the MFN model. Within 30 days, the officials were likely to inform them regarding the target prices of the pharmaceutical companies.

The added discounts on these drugs and importation programs for low-income patients will be another privilege, but it is noted that these orders probably face legal issues. The court blocked the MFN rule in 2020-21 when it was introduced in the beginning. It is believed that generic drug companies will not have any impact because of this policy.