White House Announces MFN Deal With Pfizer, Previews Additional Regulatory Action On Drug Prices

On September 30, the White House announced the first agreement with a major pharmaceutical company, Pfizer, to bring American drug prices in line with what the government describes as "most-favored-nation" (MFN) pricing. This unprecedented agreement was made in response to demands made by the White House in a May executive order (EO), and tracks the four points outlined in a letter sent to Pfizer and 16 other manufacturers on July 31.¹ The July letter included a September 29 deadline for compliance with the stipulations outlined. While the specific terms of the Pfizer agreement remain confidential, according to public announcements made by both the White House and Pfizer, under the agreement, Pfizer will:

• Provide state Medicaid programs with access to MFN drug prices on "virtually all" Pfizer products "in the near future."
• Guarantee MFN prices on all new innovative medicines Pfizer brings to market in the United States. That is, Pfizer will not launch products in the U.S. at a higher price than it charges in other wealthy countries.
• Repatriate increased foreign revenue on existing products that Pfizer realizes due to efforts by the Administration through the Department of Commerce and the U.S. Trade Representative (USTR) to pressure other countries to accept higher prices, with Pfizer using those higher revenues to fund research and development and lower prices in the U.S.
• Offer medicines at a deep discount off the list price when selling directly to American patients through TrumpRx, a website soon to be launched to make drugs available directly to patients at lower prices than currently available. According to the White House, Pfizer products available at a discount when sold directly to patients include Eucrisa, Xeljanz, and Zavzpret. According to the Pfizer press release, "[t]he large majority of the Company's primary care treatments and some select specialty brands will be offered at savings that will range as high as 85% and on average 50%."

Finally, while not directly related to drug pricing, the White House also announced that Pfizer committed to onshore manufacturing of its products, which appears to be in response to the Administration's threats to impose tariffs on those manufacturers that are not actively building U.S. manufacturing plants. As outlined by Pfizer, "[w]e've agreed to a three-year grace period during which time Pfizer products under a Section 232 investigation won't face tariffs, provided we further invest in manufacturing in the United States."

In addition to the Pfizer announcement, the Centers for Medicare & Medicaid Services (CMS) submitted a new proposed rule to OMB for review on October 2. Detail on the new regulation, entitled "Guarding U.S. Medicare Against Rising Drug Costs (GUARD) Model," is quite limited but may preview future CMMI-focused efforts on prescription drug costs.

Footnote

1. For more on the May EO, Manatt on Health subscribers can see the May 19 edition of Insights this Week. For more on the letter to pharmaceutical manufacturers, Manatt on Health subscribers can see the August 4 edition of Insights this Week.

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