The Trump administration announced two rule changes that aim to reduce the cost of prescription drugs on Friday:
- Most-favored-nation pricing: The first change aims to reduce the price of prescription drugs purchased by the government (via medicare) to the lowest price paid by any other developed nation (the “most-favored-nation” price). The rule is currently scheduled to take effect on January 1, 2021.
- Drug rebates: The second change aims to shift after-market rebates (that currently go to insurers and middlemen called “pharmacy benefit managers”) to consumers in the form of discounts. The rule is currently scheduled to take effect on January 1, 2022.
More context: Both rules are expected to face legal challenges, with several industry groups criticizing the proposed changes over the weekend.