Ed Schoonveld

Pfizer Announces Agreement with Trump Administration to Lower Prices, Join TrumpRx, and Avoid Tariffs

Trump Announces 100% Tariff on Branded Drugs Unless Pharma Builds US Plants

Trump’s MFN Drug Pricing Push Targets 17 Big Pharma Companies, Spurs Global Industry Response

The pharmaceutical pricing saga continues to keep us busy, as we observe reactions to President Trump’s most-favored nation (MFN) pricing threats and subsequent actions.

 I described how a change in the law resulted in discounts exceeding 100% for some drugs, forcing pharma manufacturers to have to give money in addition to free drugs for every patient.

The president, a step further, went on to state he was going to cut drug prices by up to 1,500%. For those among us that are perhaps a bit math-challenged, this means, for example, that for a drug with a list price of $100, the company must then provide the drug for free and, on top of that, pay $1,400. We all know that this often is just the Trump style of communicating, but the real issue is certainly no joke.

Seventeen Big Pharma companies received letters urging them to lower prices of prescription drugs to the lowest level offered in other developed nations, as per the most-favored nation model. The companies had until Sept. 29 to respond with proposals (Pfizer's deal with the US administration, announced Tuesday, was one such example).

So far, Eli Lilly has announced an intent to increase prices for some drugs; it announced a list price increase for Mounjaro, which will affect only private providers and not the National Health Service, which provides for most patients in the UK. Lilly has also launched a direct-to-consumer platform dubbed LillyDirect that sells certain medicines to cash-paying patients at a discount to their standard list prices. Novo Nordisk has launched a collaboration with GoodRx with a similar goal. 

Barry Appleton, an international trade lawyer at Appleton & Associates, used the term “policy laundering” to describe the ultimatum put on the drugmakers to increase largely government-controlled prices in other countries to avoid MFN-style price controls. This is particularly interesting, as the industry has frequently complained about government-mandated prices in many countries where the Office of the US Trade Representative response has typically been that they can only act where unfair trade practices exist, such as favorable treatment of local companies versus US companies. 

Pharma companies have had to face this issue without any US government support. Trump’s aim to increase ex-US prices resonates well with most industry executives, but they would appreciate his support rather than an ultimatum to do the impossible by themselves. Ex-US governments have had a long-standing practice of dictating drug prices and forcing prices down to manage the total drug cost within a budget that is insufficient to address increasing healthcare needs of an aging population.

Treating seniors, the disabled, and terminally ill as having lower value

 which reported that importation of price controls based on quality-adjusted life years (QALY) criteria (used in the UK, Canada, Sweden, Australia, South Korea, etc.) would be discriminatory against the disabled, as it assigns a lower value to save the life of an elderly, disabled, or terminally ill individual compared to a young and healthy individual. 

The introduction of MFN pricing in the US could be seen as an implicit declaration that seniors, disabled, and terminally ill individuals have lower value than other Americans and, as such, in violation of H. R. 485 of Feb. 8, 2024,

 which was introduced by House Republicans to prohibit the use of QALYs for all federal programs.

Rather than threatening and disabling one of the last very successful US manufacturing industries, in my opinion, the administration should provide more constructive support to try to establish fair global pricing for Rx. It seems to work for NATO funding, although the Russian threat to Europe played a clear role here. Maybe Europe should be more concerned about the next version of COVID, HIV or Ebola to better appreciate life and the industry that has often been saving it.

Ed Schoonveld is a value and access advisor for Schoonveld Advisory and author of The Price of Global Health.

1. Schoonveld, E. A Rebate Double-Whammy: Exploring the Unintended Consequences. 

https://www.pharmaceuticalcommerce.com/view/a-rebate-double-whammy-exploring-the-unintended-consequences

2. Samorodnitsky, D. Tariffs and MFN Policy Power a Broad, Confusing Pharma War. 

https://www.biospace.com/policy/tariffs-and-mfn-policy-power-a-broad-confusing-pharma-war

3. Jacobs, C. Trump’s Drug-Price Plan Would Hurt the Disabled. 

https://www.wsj.com/opinion/trumps-drug-price-plan-would-hurt-the-disabled-52ebc16f

https://www.congress.gov/118/bills/hr485/BILLS-118hr485rfs.pdf

Articles

Amid pressures on pharma to match the lowest international prices, experts warn of “policy laundering” and discriminatory impact.

Inside the MFN Pricing Actions

GSK discontinued Flovent HFA and replaced it with a generic to avoid new Medicaid rebate rules that would have required them to pay more in rebates than they made in sales.

The move led to higher patient costs and reduced access, as many insurers didn’t cover the generic, sparking public backlash and a Senate investigation into increased hospitalizations.

The policy change under the American Rescue Plan that removed the Medicaid rebate cap created a scenario where drugmakers could lose money on every Medicaid prescription, prompting market exits.

The medical and patient community are up in arms over the discontinuation of the Flovent HFA asthma inhaler by GSK in January 2024, followed by a rebranding as an authorized generic. By introducing the authorized generic, GSK avoided paying increased Medicaid rebates for Flovent. This change resulted in substantial co-payments for most patients. Sen. Maggie Hassan (D-NH) recently started a Senate investigation into claims of increased hospitalizations and preventable deaths due to lack of patient access to the medications. GSK is experiencing some fallout over perceived short-term gains at the expense of patients, as noted in reports out of the investment community.

It is obviously sad when patients suffer health complications due to poor access to much-needed medications. What happened here?

 for their Medicaid book of business over the lifecycle of its products. The rebate amounts to 23.1% of the average manufacturer price (AMP) or when higher, the difference between AMP and the “best price.” Best price is defined as the lowest available price to any wholesaler, retailer, or provider, excluding certain government programs—such as the health program for veterans—while AMP is defined as the average price paid to pharma manufacturers by wholesalers and retail pharmacies. Any price increases taken by drugmakers that are exceeding the consumer price index (CPI) are also added to the rebate. In essence, Medicaid receives the best price that any customer (with few exceptions) gets, and prices cannot increase beyond the CPI.

Particularly for drugs in competitive therapy areas, rebates to commercial health insurance companies can reach very high levels (i.e., 80% or higher). As a result of complex Medicaid rebate calculations and adjustments over years, the Medicaid rebates for some of these drugs would exceed 100% of the price if the rebates were not capped by law at 100%. 

Flovent was one of these drugs, for which the government received a full refund for all drugs used by Medicaid patients. GSK was mandated to incur substantial losses, as they were mandated to provide these drugs for free without any restriction or limitation.

As part of the America Rescue Plan Act of 2021, caps on Medicaid rebates at 100% were removed effective Dec. 31, 2023. When enacted, eliminating the rebate cap was projected

 by the Congressional Budget Office to reduce federal spending by more than $17 billion over 10 years. As a result of the elimination of the caps, Medicaid rebates for some drugs from then on exceeded 100% of the price, thus forcing pharma companies to pay more in rebates than they received in sales revenues for drugs such as Flovent. For every unit used by Medicaid patients, GSK and other companies now lost money.

It is not clear what drove the Biden administration to remove the Medicaid rebate cap.

In January 2024, GSK authorized Prasco Laboratories to launch an authorized generic for Flovent and withdrew its own Flovent from the market. Prasco’s drug was launched at a lower list price, but with a “reset” of the mandatory Medicaid rebates, it resulted in a price higher than zero for Medicaid and a need to renegotiate rebates for other insurance channels. Most payers balked at covering the authorized generic and instituted formulary exclusions or unattractive tier placements, resulting in high cost to patients that did not have a suitable alternative.

Patients are literally paying the price for the Flovent market withdrawal and insurance companies’ decisions not to cover the generic. Should GSK have kept Flovent on the market despite that annual $368 million rebate bill that far exceeds the Medicaid revenue collected for Flovent? Should insurance companies have been more flexible in providing coverage for Flovent, even at a somewhat higher copayment? Maybe. However, the biggest question is why a government insists on a better than “for free” deal. What were they thinking?

1. Northwood R. The Flovent HFA Exit: A Cautionary Tale for Pharma Investors in an Era of Regulatory Shifts. AInvest. June 27, 2025. 

https://www.ainvest.com/news/flovent-hfa-exit-cautionary-tale-pharma-investors-era-regulatory-shifts-2506/

2. Dolan R. Understanding the Medicaid Prescription Drug Rebate Program. KFF. November 12, 2019. 

https://www.kff.org/medicaid/issue-brief/understanding-the-medicaid-prescription-drug-rebate-program/

3. Williams E. What are the Implications of the Recent Elimination of the Medicaid Prescription Drug Rebate Cap? KFF. January 16, 2024. 

https://www.kff.org/policy-watch/what-are-the-implications-of-the-recent-elimination-of-the-medicaid-prescription-drug-rebate-cap/

The GSK Flovent example highlights the consequences for patients and pharma of the decision to eliminate the Medicaid rebate cap.

A Rebate Double-Whammy: Exploring the Unintended Consequences 

A panel of industry leaders share key insights supporting the integration of patient-centric strategies into current and future drug development and market access efforts.

Rethinking Go-to-Market Strategy with Innovation in a Patient-Centric Era

As the series closes, the panel reflects on an often underrepresented but crucial stakeholder: the patient. The discussion underscores the need for a more patient-centered market access strategy—one that incorporates health equity, diagnostic and treatment journey support, and clearer communication around cost and adherence.

How social determinants of health (SDOH) shape real-world treatment access.

The growing need for payer transparency and patient trust in the marketplace.

Strategies to engage patients early in development to ensure success.

Videos

Industry stakeholders suggest how pharmaceutical companies can proactively plan for the potential implementation of a Most Favored Nation (MFN) pricing model.

Planning for Market Sustainability Under New Policy Frameworks

The Most Favored Nation (MFN) pricing policy aims to align US drug prices with lower international rates. The panelists share varying perspectives on this policy, including its uncertain future, the need for greater pricing transparency, and how manufacturers might defend price differences based on value, clinical investment, and regulatory requirements. Also discussed are potential overlaps with the Inflation Reduction Act and the crucial role that proactive advocacy plays in a changing policy landscape.

The potential impact of MFN pricing on US drug costs and the current market.

Why pricing transparency and value justification are increasingly essential for pharmaceutical companies.

The role of scenario planning and value proposition refinement in navigating regulatory uncertainty.