At a news conference this week, President Trump touted a deal with Pfizer in which the drug company will sell some of its drugs at discounts on a federal government-run website called TrumpRx. The pharmaceutical giant also agreed to sell its medications to the Medicaid program at “most favored nation” prices or the lowest offered in other similarly wealthy nations. However, for the vast majority of patients in the United States, their out-of-pocket costs won’t change as a result of this policy.
Pfizer CEO Albert Bourla said that his company would be complying with all four of Trump’s demands spelled out in an executive order issued in May. Specifically, the order requested that manufacturers provide “most favored nation” pricing of prescription pharmaceuticals to the Medicaid program, not offer better prices to other comparably wealthy developed countries for new drugs, create direct-to-consumer sale platforms and raise prices internationally so that revenue is reinvested into lowering American prices.
At the news conference, Trump announced a new direct-to-consumer website called TrumpRx that will be operated by the federal government and offer drugs at discounted prices. Bourla cited discount percentages to be offered for several of its drugs on TrumpRx.
The deal includes a promise by Pfizer to invest in U.S.-based manufacturing. This in turn gives the company a three-year reprieve from new tariffs on imported drugs. Pfizer is the first pharmaceutical company to sign up in what Trump declared would be the start of a series of deals with other firms.
The administration defines a most favored nation price as the lowest among countries with at least 60% of U.S. gross domestic product per capita. The Wall Street Journal reports that the administration has included Canada, France, Germany, Italy, Japan, the United Kingdom, Switzerland and Denmark as comparator nations for price calculations.
To see whether the announced discounts establish a most favored nation price, I examined the case of Xeljanz (tofacitinib), prescribed for multiple auto-immune conditions.
Pfizer says it is lowering Xeljanz’s price in the U.S. on TrumpRx by 40%. The company didn’t explicitly state whether the discount is off of a list or net price. But from publicly available sources we know that the wholesale acquisition cost, which is a list price, is approximately $6,000 for a month’s supply. Given the announced 40% discount, Xeljanz is expected to cost roughly $3,600 for patients who make their purchases on TrumpRx.
To evaluate whether in fact this is a most favored nation price, I reviewed pricing and reimbursement data from France, Germany, and the United Kingdom, three of the countries mentioned by the Trump administration as being comparator nations. The prices I found ranged from around $780 per monthly prescription to about $1,330. [These are converted amounts in U.S. dollars from figures enumerated in the euro and sterling pound currencies] It wasn’t clear if these were list or net prices, though it’s probable these were list prices as net prices tend to be proprietary.
From what little we know about precisely how the Trump administration or drug companies calculated most favored nation prices, Xeljanz’s price does not seem to reflect most favored nation status.
It’s important to note that Pfizer didn’t say it would offer most favored nation prices for all of its products. Instead, it stated that it would "often” provide such pricing. This said, the U.S. price of $3,600 is much higher than in comparator nations.
But more importantly, Xeljanz generally has very low monthly patient co-payments outside the U.S. These range from nothing at all for most patients in the U.K. to $11 per prescription in Germany to possibly as much as $195 in France (though most French beneficiaries have supplemental insurance that substantially reduces or eliminates their co-payments).
Will the Pfizer deal do anything to reduce U.S. patient out-of-pocket costs for this medicine? It appears not, at least for the vast majority of patients. To explain this, we need to describe some of the longstanding complexities of prescription drug pricing in the U.S. While list prices are publicly posted, they’re rarely the price paid for by patients for prescription medicines unless one is uninsured. Insurers and pharmacy benefit managers pay net prices. But these differ depending on the market. The three main markets in the U.S. are commercial, Medicare and Medicaid. Patient co-payments differ considerably across the three markets.
Medicaid co-payments for patients are nominal; often as little as a few dollars per prescription. The Medicare and commercial markets operate with deductibles which can be anywhere from $500 to several thousand dollars. This is the amount patients must spend out-of-pocket before their insurance kicks in. Then, covered drugs have a wide variety of patient cost-sharing requirements, including fixed co-payments and co-insurance (percentage of a drug’s list price) amounts. Medicare beneficiaries and commercially insured enrollees typically pay a fraction of a drug’s list price. For Xeljanz, this can be as little as $20 for some beneficiaries.
And so, for most Americans who have coverage in one of the three markets discussed above—approximately 90% of the population—having their insurance cover most of Xeljanz’s cost will be much more financially advantageous than paying $3,600.
On the other hand, for those without insurance, the cash price will be lower. Nonetheless, for a drug like Xeljanz one has to ask the question, who in America has $3,600 lying around to pay for it? The answer is very few.
Trump has repeatedly said “we” pay too much for prescription medicines, presumably referring to American patients. He has also stated that Europeans should pay their “fair share.” Supposedly, the goal of a most favored nation model is to equalize or at least significantly close the gap between what American and European patients pay. But there is little if any real change going on here in terms of what American and European patients pay.
Chief Operating Officer at C.O. Bigelow Apothecaries, Alec Ginsberg, offers a pharmacist’s perspective: "The drugs chosen are ones almost no one actually pays cash for (at C.O. Bigelow Apothecaries, we filled just 4 prescriptions combined last year).
Meanwhile, the real drivers of high costs—PBMs, rebates, and patent games—remain untouched."
There are direct-to-consumer channels like Mark Cuban’s Cost Plus, which offer a wide variety of mostly generic drugs and some biosimilars at heavily discounted prices. Nonetheless, for specialty branded drugs such as Xeljanz there are comparatively few outlets. The ones that do exist for, say, branded weight loss drugs, provide uninsured patients and those with insurance who don’t have coverage for specific products a more affordable option. However, experts suggest that patients are paying considerably higher prices for the branded pharmaceuticals on direct-to-consumer platforms than they would if their insurance covered the drugs.
It’s unclear whether most favored nation pricing will be lower than what Medicaid payers—state Medicaid agencies and Medicaid managed care plans—currently pay. By law, Medicaid already gets significant federally mandated rebates in addition to supplemental rebates that can be negotiated separately state-by-state by Medicaid plans. According to data from 2020, across all brand-name specialty drugs like Xeljanz purchased by Medicaid nationally, rebates reduced spending by more than 60% off of an approximate list price.
Presumably, the $3,600 figure could serve as a benchmark for Medicaid payers from which supplemental rebates may be negotiated. But it’s not at all clear whether ultimately the price agreements reached would save Medicaid additional money.