JAMA: Lowering Drug Prices in the US—Look Within, Not Abroad (Viewpoint)

By Editor, Concierge Medicine Today on July 30, 2025

Citation

Gondi S, Papanicolas I, Rome BN. Lowering Drug Prices in the US—Look Within, Not Abroad. JAMA. Published online July 28, 2025. doi:10.1001/jama.2025.12324

On May 12, 2025, the Trump administration issued an executive order to lower prescription drug costs by mandating that the US pay no more than prices in peer countries.¹ The legality of implementing this so-called most favored nation (MFN) pricing through executive action is unclear. However, the idea of benchmarking US drug prices to prices in other countries is not new. The Trump administration unsuccessfully attempted a more limited MFN policy during its first term, and a 2019 bill passed by House Democrats used international prices as upper limits for Medicare price negotiations.² Although lowering drug prices is a priority, achieving this by linking prices in the US to those in other countries is a misguided approach built on a misdiagnosis of the reason prices are higher in the US than in other countries.

Efforts to lower US drug prices by using international benchmarks, including the MFN policy, stem from the notion that it is unfair that the US pays a disproportionate share of global pharmaceutical development costs. The US does spend more on prescription drugs than do other high-income countries, driven by higher prices for brand-name drugs. The US accounts for half of global pharmaceutical revenue.³ The Trump administration expects that, as US prices go down, prices in other countries will increase, forcing these countries to pay their fair share and ending foreign “freeloading on American-financed innovation.”¹

This view, however, misunderstands global pharmaceutical pricing. The reason other high-income countries pay less is simple: they negotiate prices with manufacturers as a condition for coverage, often by national public insurance systems. Most countries’ negotiations are informed by comparative effectiveness analyses to understand new drugs’ added benefits relative to existing therapies.⁴ Some countries, such as England, authorize coverage only for drugs that meet certain cost-effectiveness thresholds, but others, such as Germany, have greater flexibility; these differences allow negotiations to represent the needs and preferences of different populations.

In contrast, the US has no central health technology assessment or price negotiation, leaving a fragmented set of public and private payers to negotiate with incomplete information. Moreover, public plans, including Medicare and Medicaid, are required to cover certain drugs, further impairing their ability to negotiate with manufacturers.

SOURCE: https://jamanetwork.com/journals/jama/fullarticle/2836817?guestAccessKey=63eb5685-bdf9-47fa-819c-fc29e04f9410&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=072825