Drugmakers Pressure Trump to Withdraw Foreign Pricing Frameworks

Major biotech and pharmaceutical companies are asking the Trump administration to rescind two proposals seeking to align US drug prices with cheaper ones overseas, warning the sweeping policies harm innovation and exceed the government’s authority.

The Centers for Medicare & Medicaid Services’ plans would test whether alternative methods for calculating rebates under Medicare Part B and Part D, based on international pricing metrics, will reduce drug costs. The pricing demos, which are mandatory for manufacturers to participate in, would help implement President Donald Trump’s most-favored-nation plan that attempts to match US prices with lower ones in other wealthy nations.

Some of the world’s largest drugmakers are rejecting the proposals, questioning the agency’s legal ground and methodologies. If finalized, the demonstrations could inject a new wave of instability into how manufacturers bring new therapies to the market and price them in the US, according to comments the industry submitted in response to the plans.

“Imposing pricing policies that introduce additional unpredictability—particularly those tied to foreign price benchmarks—could dampen investment in areas where investments are especially high risk but may yield revolutionary new therapies,” the Biotechnology Innovation Organization, the chief lobbying group for more than a thousand biotech companies, said to the agency.

The Pharmaceutical Research and Manufacturers of America, the drug industry’s influential lobbying arm, similarly urged the government to withdraw its plans.

The requests come despite the various deals manufacturers have struck with Trump to slash drug prices. Those agreements, which were voluntary, are primarily focused on Medicaid and direct-to-consumer drug purchasing platforms.

Some drugmakers have wondered if they would be exempt from the pricing models if they made a deal with Trump. A CMS spokesperson said in an email that if the proposals are finalized, the agency would outline how the models would interact with existing pricing arrangements.

Meanwhile, CMS Administrator Mehmet Oz is urging lawmakers to codify Trump’s most-favored-nation policies into law, a move that would bring more legal protections to the plan.

Not a ‘Test’

The CMS said it plans to exercise its authority under Section 1115A of the Social Security Act, a law that allows it to test new payment and service delivery models aimed at reducing costs and improving quality of care.

The models would ultimately require that manufacturers pay an incremental rebate if the Medicare price for a drug exceeds an international benchmark price. That comes in addition to the current inflation rebate they pay under federal law.

But the industry has long questioned whether the proposed systems are allowed under the statute and if the CMS can implement them without congressional authorization.

The plan is “nothing like the sample models included in the statute,” Bristol Myers Squibb Co. said, arguing that it doesn’t include a meaningful control group, an adequate testing rationale, or criteria to assess the results of the test.

The models, which would be tested among a random 25% of beneficiaries of the Part B and Part D programs, also don’t “define a clear population with deficits in care,” Johnson & Johnson said. Instead, the plan “identifies certain high-spend drugs and imposes new rebates,” the drugmaker said.

GSK Plc also criticized how it “extends to matters beyond Medicare” by attempting to regulate prices between the US and other countries. The plan doesn’t improve quality and access of care to beneficiaries, which is a component to a payment or delivery system, the company argued.

“The operational details will drive their real-world impact,” So-Yeon Kang, an assistant professor at Georgetown University School of Health, said in an interview. “Manufacturers aren’t dealing with just a single pricing rule.”

Innovation Risks

The demonstrations also stand to influence how manufacturers invest in US innovation if the federal government aligns pricing policies with foreign markets that are rooted in different values, drugmakers said.

AstraZeneca Plc was particularly concerned about the impact on rare disease drugs, asking the CMS to carve out cell and gene treatments from the Part B model.

“These therapies often depend on a small number of approved indications to recoup investment and fund future research,” AstraZeneca said. “Mandatory pricing mechanisms that compress revenue without accounting for these realities risk disproportionately harming rare disease drug development.”

The development of generic and biosimilar products, which are cheaper alternatives to branded medications, would also be threatened, the Association for Accessible Medicines said.

The industries require predictability so that manufacturers can forecast the market they are entering, but the models remove that stability “by imposing pricing benchmarks in randomly selected geographic areas that are not connected to market prices,” the group said.

Any policy implementing most-favored-nation would also impair biotech companies’ ability to raise the venture capital funding needed to finance research and development, according to Incubate, a coalition of early-stage life sciences investors.

“A lot of people are tangled up in the noise of how to look at a company’s portfolio and figure out when and where this is going to impact them,” Scott Roberts, chief strategy officer and managing partner at MOMENTUS Biopharma Consulting, said in an interview. “This government is layering on price pressure once their product hits the revenue thresholds.”