Federal policymakers are now pressing on drug prices from six directions at once: tariffs, most-favored-nation pricing deals, international price benchmarks in Medicare and Medicaid, reshoring and limits on importation. Several of these efforts are delayed, narrowed or facing lawsuits, so hospital pharmacy leaders face moving timelines on most of them.
Here are six ways the federal government is going after drug prices:
1. Tariffs. Section 232 tariffs on patented drugs and their ingredients took effect Sept. 29 for companies not covered by the earlier July 31 start date. The baseline rate is 100%, but rates vary based on trade agreements, onshoring plans and other exemptions. Companies with qualifying onshoring plans and most-favored-nation pricing agreements pay a zero rate through Jan. 20, 2029. All 17 large manufacturers named in the first wave have signed most-favored-nation deals, and generics are not subject to the Section 232 tariffs at this time. The White House has also released a list of drugs eligible for exemptions.
2. Most-favored-nation deals and TrumpRx. Most-favored-nation agreements have also put discounted drugs on TrumpRx, but the savings are uneven. A Peterson-KFF analysis of 32 brand-name drugs found TrumpRx prices were lower than the peer-country average for 17 drugs and higher for 15. An April Senate report found manufacturers with most-favored-nation agreements raised prices on hundreds of other drugs while discounting select drugs on TrumpRx.
3. Medicare Part B benchmarks. CMS finalized the Global Benchmark for Efficient Drug Pricing Model, or GLOBE, which ties Medicare Part B inflation rebates to prices in 19 reference countries. It covers certain drugs typically administered by clinicians in healthcare settings. The final rule is considerably narrower than the proposal: It excludes orphan-only drugs, plasma-derived products, certain cell and gene therapies, and biosimilars and their reference biologics once a biosimilar enters the market. Projected savings fell to $440 million over seven years. The model launches Jan. 1, 2027, and applies to randomly selected areas covering about 25% of Original Medicare beneficiaries. PhRMA has sued to block it, arguing CMS lacks the authority to impose international price benchmarks.
4. Medicaid and Part D benchmarks. Under CMS’ Medicaid-focused GENEROUS model, 40 states and Puerto Rico have signed agreements to participate in a model using supplemental rebates to align Medicaid net prices with prices in certain other countries. All 50 states, Washington, D.C., and Puerto Rico applied to participate. A companion proposed model called GUARD would bring a similar international benchmarking approach to certain Medicare Part D drugs.
5. Reshoring. The administration is developing an initiative aimed at securing domestic production of 86 essential medicines and their precursors within 18 months. The Office of Management and Budget is seeking information on domestic and nearshore production capacity, and the effort cites national security and dependence on foreign entities of concern. The Economic Development Administration has put $15.97 million toward a Civica-led project to build a fully domestic supply chain for four sterile injectables. Nine drugmakers that signed most-favored-nation deals have also committed at least $19.6 billion collectively to U.S. manufacturing.
6. Importation. U.S. Customs and Border Protection has delayed new international mail entry requirements until Jan. 20, 2027. The requirements had been set to take effect Oct. 22 and raised concerns that Americans buying drugs from Canadian and other foreign mail-order pharmacies could face disruptions. More than 2 million Americans bought prescription drugs from outside the U.S. to save money, according to a 2020 study, and advocates warned the changes could disrupt access to medications such as Eliquis.
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