Trump revives plan for IRP use in US via MFN executive order

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US President Donald Trump revived a plan that he failed during his first term that requires the price of American drugs by measuring their prices in the same product in other countries. The mechanism, which is referred to as the most preferred for the nation (MFN) in the executive order of TROMP 12 (EO), is up to the level of international reference pricing (IRP)-a price determination system that Globaldata is the leading expert in the world.

IRP is currently used by more than 75 countries around the world to determine the prices of medicines. Globaldata analysts follow the changes on IRP systems in all countries daily and they can judge the effects of small adjustments to the current external reference bases (ERP) for drug prices and the ability to indicate. As such, Globaldata is in an ideal position to judge whether Trump’s MFN EO MFN EO will produce the intended result.

In short, EO aims to secure the prices of American drugs, which are the lowest among the reference countries through the following measures:

The Ministry of Health and Humanitarian Services (HHS) will inform the pharmaceutical companies in the next thirty days. What are the acceptable prices
If “big progress” is not made, HHS is directed to impose rules that will lead to MFN prices
If companies fail to comply, the American government may: 1) take enforcement measures against anti -competition practices, 2) Review export licenses for the final pharmaceutical preparations and the application programming interface, 3) Review and cancel the potential marketing statements of the drugs that were found “incorrectly marketed”

The approach taken in EO is the threat of pharmaceutical companies to reduce medicine prices, but it suffers from a lack of management in realizing how IRP is already working. ERP details are necessary to determine the permitted prices under IRP. Among them:

It seems that the price calculation formula (which is based on EO, is the “lowest price” among the reference countries)
The basket of the reference countries and any specific arrangement to return within it
What products will be subject to pricing under IRP (for example, all prescribed medications, or some of them only; recovered drugs, also non -preserved drugs; only patent drugs, limestone and vital drugs; retail drugs, hospital drugs, or both))
The number of times the prices will be determined under IRP (for example, only at launch or also at certain time periods after launch)
Whether the prices will be modified from the reference countries in any way before using it for American pricing (for example, whether mandatory discounts will be merged, or foreign prices will be modified – the best IRP instructions will be recommended by purchasing Power Power).
What is a suitable product for signal (for example, if it has the same formula, the number of units for each package, etc.)
What is the exchange rate to be used to transfer foreign prices

IRP features and other IRP drugs will be determined under the TRMP MFN plans. It is examined in accurate details in the IRP360 profiles in Globaldata, which are updated regularly when the regulations change – as they do frequently.

To date, the Trump administration has only provided the formula (i.e. achieving the lowest price between the reference countries), but all other aspects of the IRP system are subject to guessing. Without the specific mechanism details, it is impossible to accurately determine the IRP entry effect in the United States.

However, the two results are clear, even at this early stage.

One of the details that has survived American policy makers is that IRP works by affecting the list price – that is, the “official” price of the drug. Undoubted US list prices are undoubtedly higher than those in other countries for most of the originator medicines; However, they are not real prices. Pharmaceutical manufacturers provide large discounts, which are currently absorbed as a profit by various third parties participating in the American pharmaceutical distribution process.

By forcing the pharmaceutical industry to reduce the prices of the United States list, the Trump administration will directly reach the profits of pharmacy advantages (PBMS) and private health insurance companies. The reason for this is that the pharmaceutical companies, which face strong pressure on the list price, will have no choice but to reduce the confidential discounts they give to third parties.

In other countries, the introduction of IRP in the United States will only affect the existing price levels in a marginal way, but it will lead to a delay at all-a negative impact of IRP that is not proportional to patients in markets with low-price and references frequently. This effect will occur because as soon as the basket of the reference countries that the United States plans to refer to it becomes clear, companies will be motivated to maintain the high prices in these countries, in an attempt to protect their prices in the United States. However, companies may not be able to maintain high prices if most countries in the American reference basket have strong measures to monitor prices and use them IRP to determine the prices of medicines. Therefore, Pharma’s only asylum to protect American prices will be the delay in launching products affected in countries where the United States indicates, or remove the specified packages/formulas that the United States refers to from these markets, or both.

To employ Trump’s character often: politicians do not carry all cards. The pharmaceutical industry contains some cards in its hand, and how you choose to play it will determine the result of the Trump policy.

“Trump revives the IRP plan in the United States via an executive of MFN” was originally created by Pharmaceutical Technology, a brand owned by Globaldata.

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2025-05-16 15:44:00

0 4 minutes read