A recent Lancet study warns that proposed US Medicare pricing reforms—tied to the Trump administration’s “Most-Favoured-Nation” models—may trigger global pharmaceutical price hikes and launch delays. The policy links Medicare drug payments to rates in other high-income nations, potentially forcing manufacturers to adjust international pricing strategies to offset revenue losses.
Medicare, the United States’ federal health-insurance program, provides coverage to roughly 68 million seniors and people with disabilities. Until the Inflation Reduction Act of 2022, it was prohibited from directly bargaining with drug makers, though the law now permits limited negotiations for a handful of high-cost medicines.
The Trump administration’s new ‘Most-Favoured-Nation’ policy goes further, aligning what Medicare pays for brand-name medicines with prices in comparable high-income countries, adjusted for purchasing power. Under the GLOBE and GUARD pricing models, a randomly selected 25% of Medicare beneficiaries would be covered over a five-year period.
The study examined 195 patented pharmaceuticals that together represent $87.9 billion of Medicare’s yearly outlays. Researchers approximated the program’s net price for each product and contrasted those figures with prices observed in 19 benchmark countries under the suggested policy, in order to calculate possible savings.
Manufacturers May Raise Prices Abroad
For three in four medicines studied, the cut in estimated Medicare savings from benchmarking to a lower price was larger than the medicine’s total annual sales in the reference country. To avoid losing that much revenue, manufacturers would have a strong incentive to raise prices outside the United States or delay launches.
Separate reports indicate that several manufacturers have entered into confidential agreements with the Trump administration. If the drugs produced by the first 17 companies that secured such deals are omitted from the pricing framework, the analysts estimate that the overall savings potential would drop by 71 %.
“The Trump administration’s Most-Favoured-Nation pricing models have the potential to deliver real savings to the US federal government and taxpayers. But if manufacturers can evade participation in these models by striking side deals, most of those savings might not be realised,” said Prof. Thomas Hwang of Brigham and Women’s Hospital and lead author of the study.
Cheapest Reference Price Is 71 Percent Lower
The cheapest price used as an international reference was found to be 71 % lower than Medicare’s current payment, with South Korea, Norway and Australia emerging as the most frequently cited reference nations. For approximately 73 % of the medicines examined, the estimated reduction would surpass the drug’s total yearly sales in the country that set the US reference price.
The original cohort of 17 pharmaceutical firms negotiated private exemptions from the GLOBE and GUARD mechanisms. These companies account for 131 of the 195 drugs analyzed (about two-thirds). Excluding those products from the rule set would shrink the projected savings by roughly 71 %.
The authors acknowledge several constraints: the calculations depend on modeled Medicare net prices and on foreign price data drawn from public sources, which may omit undisclosed discounts; the drug roster, based on historic Medicare claims, might not reflect newly approved agents or future policy revisions.
Major Drugmakers Have Secret Agreements
As of June 2026, the 17 firms reported to have Most-Favoured-Nation arrangements with the Trump administration are AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly, EMD Serono (Merck KGaA), Gilead, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron, Roche/Genentech, and Sanofi. The study’s results were delivered at the Nordic Pharmaceutical Forum Summit.
The study was funded by Arnold Ventures, and a full list of authors and their institutions is available in the paper, titled “Most-favoured-nation pricing for prescription drugs in US Medicare: a cohort study,” published in The Lancet on October 3, 2026.
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