Trump administration’s plan to link Medicare drug payments to prices in 19 wealthy countries could yield far smaller savings than advertised, a new analysis finds. The study indicates that confidential arrangements struck with more than two dozen pharmaceutical companies may reduce projected budgetary gains by as much as 80 percent, undercutting the White House projection of $26 billion in savings over several years.
The policy framework rests on two pilot initiatives that aim to press U.S. prices toward international benchmarks. The first, GLOBE, addresses Medicare Part B medicines; the second, GUARD, targets Medicare Part D. Both pilots would require drugmakers to issue additional rebates when prices charged in the United States exceed the lowest price observed among the selected peer nations.
The analysis highlights how negotiated exemptions, carve-outs or undisclosed side agreements between manufacturers and payers can blunt the intended fiscal impact of most-favored-nation style pricing. While advocates of the approach argue it would rein in long-term drug inflation, the new findings caution that private arrangements may allow list prices or net revenues to be preserved despite the rebate mechanisms embedded in the pilots. Detailed regulations governing implementation are still pending, leaving questions about enforcement and the programs’ ultimate reach.
Observers say the potential reduction in projected savings has implications for federal budgeting and for beneficiaries enrolled in Centers for Medicare & Medicaid Services programs. Lower-than-expected offsets could alter calculations about program solvency and patient out-of-pocket costs, while the prevalence of nontransparent deals raises concerns about oversight and accountability. Administrators have signaled that more specific rulemaking and guidance are forthcoming, even as stakeholders from government, industry and patient groups prepare to weigh in on the pilots’ final design.
