Trump Administration outlines projected savings from MFN drug pricing framework

Nearly 1 year after the Trump Administration introduced its Most-Favored-Nation (MFN) drug pricing Executive Order, a new report from the White House Council of Economic Advisers estimates the policy could generate almost US$600 billion in savings over 10 years, while reframing the approach as an effort to redistribute the global costs of pharmaceutical innovation across high-income countries.

The Baseline

• The Trump Administration’s MFN framework aims to tie US prices for certain branded medicines to prices paid in selected high-income reference countries.
• A new analysis from the White House Council of Economic Advisers projects substantial long-term savings from future drug launches, Medicaid spending reductions, and direct-to-consumer pricing initiatives.
• The report presents the policy as part of a broader effort to address international drug price disparities while preserving incentives for pharmaceutical innovation.

The Trump Administration has published a new report from the White House Council of Economic Advisers (CEA), the Administration’s economic analysis body, outlining the projected financial impact of its Most-Favored-Nation (MFN) drug pricing framework, estimating that the policy could generate up to US$600 billion in savings over the next decade. Published on May 5, the report quantifies both the Administration’s current MFN-related initiatives and the projected long-term effects of the policy framework.

Released almost 1 year after the Executive Order aimed at reducing disparities between US drug prices and those paid in other developed nations, the report, titled “Savings from Most-Favored-Nation (MFN) Drug Pricing Policy”, describes a framework intended to narrow international drug price differences through the use of international reference pricing. According to the report, the Administration has already reached voluntary MFN pricing agreements with 17 pharmaceutical manufacturers and expects additional agreements to follow.

Under the framework, future branded drugs and biologics launched in the US would be priced comparably to products sold in a basket of reference countries, including G7 nations excluding the US, alongside Denmark and Switzerland. The report states that this “prospective MFN” model would apply across all US markets, including private insurance, commercial coverage, and direct-to-consumer purchasing channels, and could generate approximately US$529 billion in domestic savings over 10 years across commercial insurance, government programs, and direct-to-consumer markets.

The report positions the policy as a response to longstanding concerns regarding international drug price variation. Citing prior analyses from the Office of the Assistant Secretary for Planning and Evaluation (ASPE), the report notes that US prices for brand-name drugs are estimated to be approximately three-times higher than prices in selected peer nations.

In addition to future drug launches, the framework also proposes applying MFN pricing to existing drugs within Medicaid where current net prices exceed the MFN benchmark. The CEA estimates this component could reduce Medicaid drug spending by US$64.3 billion over 10 years, with savings shared between federal and state governments. Therapeutic areas identified as likely to achieve the highest proportion of savings include antipsychotics, antiretrovirals, oncology medicines, inflammatory disease treatments, and antidiabetic therapies.

The report also highlights the Administration’s direct-to-consumer pricing initiative through TrumpRx.gov, which connects patients to discounted medication offers. According to the report, uninsured users of GLP-1 medicines for weight loss could save approximately US$3,000 annually by 2028 under negotiated pricing agreements. The report additionally projects fertility treatment savings exceeding US$6,000 per live birth due to lower prices for IVF-related medicines.

The report also states that the MFN framework is intended to operate alongside broader trade policy efforts aimed at increasing pharmaceutical spending contributions from other high-income countries. Citing the arrangement between the US and the UK, the report notes that changes including lower clawback rates and higher cost-effectiveness thresholds for new medicines are expected to increase spending on both existing therapies and future launches. The Administration states that it expects to replicate similar approaches across other reference countries. The report further argues that these “tailwinds for innovation” could be strengthened by ongoing FDA initiatives intended to accelerate drug development and regulatory review processes, including the use of AI-supported review tools, Bayesian methodologies in clinical trials, and the plausible mechanism framework for individualized therapies.

The CEA contrasts the MFN approach with drug pricing reforms introduced under the Inflation Reduction Act (IRA), arguing that the proposed MFN framework would extend pricing effects beyond Medicare into commercial insurance and direct-to-consumer markets.

The report concludes that the framework is intended to “lower costs for patients, enhance fiscal sustainability for public programs, and correct the longstanding inequity by which Americans bear a disproportionate share of the global costs of drug innovation.”