Pharma is facing its nightmare scenario

[Northeast Agent]

https://www.axios.com/2025/05/13/trump-drug-prices-pharma-most-favored-nation?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Why it matters: Trump's announcement could be the start of enormous global disruption for the pharmaceutical industry — or it's the least-bad version of what was on the table, depending on who you ask.

• But the continued risk of a "most favored nation" policy that pegs U.S. drug prices to those paid in other developed nations is a massive threat to drugmakers' bottom lines, especially coming on top of the pharmaceutical tariffs Trump has said he wants to impose.
• The big questions are whether it ever comes to fruition, and whether drugmakers could have done more to avoid getting to this place at all, especially given Trump's laser focus on drug prices and the populist leanings within the GOP.

 

[Newby]

https://www.axios.com/2025/05/13/trump-drug-prices-pharma-most-favored-nation?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

Why it matters: Trump's announcement could be the start of enormous global disruption for the pharmaceutical industry — or it's the least-bad version of what was on the table, depending on who you ask.

• But the continued risk of a "most favored nation" policy that pegs U.S. drug prices to those paid in other developed nations is a massive threat to drugmakers' bottom lines, especially coming on top of the pharmaceutical tariffs Trump has said he wants to impose.
• The big questions are whether it ever comes to fruition, and whether drugmakers could have done more to avoid getting to this place at all, especially given Trump's laser focus on drug prices and the populist leanings within the GOP.

Hmmmmm? Good for American seniors. But likely will result in more Wellcare-style solutions for agents.

 

[somarco]

Pharma will challenge this EO and who knows how long it will drag out.

It won't be cheap to fight . . . legal fees will be baked into operating costs and passed on to consumers.

Even if the US is successful in getting their favored nation pricing, Pharma will not forfeit their profit on high markup drugs and will most likely spread the profit margin around to lower price drugs.

Many of the newer drugs are researched, tested and filed for approval by using profits.

According to a Deloitte study, the cost of bringing a new drug to market is around $2.5 billion. Even when approved the payback can take years and some drugs may never be approved by the FDA which means they will not be on any drug formulary.

Orphan drugs may also disappear from the market.

And the days of low priced generics may likewise disappear.

The US pays more for brand name, legacy drugs but roughly 90% of prescriptions filled are for inexpensive generics. Those same drugs cost consumers considerably more in Europe.

 

[annon123]

Pharma will challenge this EO and who knows how long it will drag out.

It won't be cheap to fight . . . legal fees will be baked into operating costs and passed on to consumers.

Even if the US is successful in getting their favored nation pricing, Pharma will not forfeit their profit on high markup drugs and will most likely spread the profit margin around to lower price drugs.

Many of the newer drugs are researched, tested and filed for approval by using profits.

According to a Deloitte study, the cost of bringing a new drug to market is around $2.5 billion. Even when approved the payback can take years and some drugs may never be approved by the FDA which means they will not be on any drug formulary.

Orphan drugs may also disappear from the market.

And the days of low priced generics may likewise disappear.

The US pays more for brand name, legacy drugs but roughly 90% of prescriptions filled are for inexpensive generics. Those same drugs cost consumers considerably more in Europe.

Not to mention only about 10% of drugs in development even make it to clinical trials of which only 3% of drugs in development become block busters. Late stage expensive failures due happen. Around 8or 9 years ago one company had a late stage 3 clinical trial failure that cost around $1.2B in losses. As that company was one of the major drug companies that supported the Leukemia and Lymphoma Society grant program for patients (and the LLS stupidly allocated money based on anticipated donations back then) most had their awarded financial aid pulled back that year - including me).

This is one reason why Venture Capital has become involved in drug development. They invest in small companies developing promising drugs. At the point the drug is ready for clinical trials the small company is sold to Pharma (because Pharma has the infrastructure in place to do them and that infrastructure is very expensive). Saves Pharma from investing in many eventual failures BUT Pharma tends to try to develop drugs that address larger needs (for future anticipated profits) where as most small company investments are for very small niche medical illness markets that may or may not have much of a need (so mostly in the orphan drug category). The net affect is the reduction of research into what could turn into block buster drugs with widespread patient need.

The other issue is that Medicare is the ONLY insurance in the USA that can't negotiate all drugs and are left paying what Pharma dictates (and so often lower prices are paid by everyone but seniors as Pharma makes up profit reductions with other insurance companies, the VA, Medicaid, with higher prices to seniors. As a result seniors with medicare could still end up paying more for the same drugs that the rest of the USA pays (eg insurance company, VA, Medicaid negotiated rates) for drugs as Pharma may try to make up some of the "losses" with higher costs to seniors. While discount coupons could help, many seniors don't know that they can turn in receipts for Rx drugs they bought with coupons to have those costs deducted from their MOOP with D's. And likely costs even with coupons will go up as coupons may lower the prices less since generics could well cost more. I think the odds are high that we can say good by to $0 tier one drugs or what is in that tier is vastly reduced.

All of this, of course, will put stress on insurance companies with D's if the MOOP is still regulated. That in turn will drive up those premiums and the costs for those who otherwise wouldn't have hit the MOOP. If Pharma ends up (which they will) shifting profit sources by increasing generic retail price, in the long run more seniors than the ones affected this year will pay more. As this year with the $2k MOOP there was the shifting of tier prices to percent of the drug cost in most tiers from a fixed amount along with changing what was in the different tiers.

This change will still not have seniors on an equal footing since Medicare is not able to negotiate prices on nearly all drugs. What is not included in the potential law is that Medicare can't be charged more than anyone else. Of course even if that is put into the law so many don't have insurance that Pharma can state that Medicare is charged no more than those without insurance even when all with insurance are generally charged less.

Of course (sarcasm) one way work on solving the poverty problem in this country is to kill the elderly (and the poor without insurance) by pricing needed drugs to treat chronic conditions and acute conditions out of reach.