On September 29, as a government shutdown loomed, President Trump announced a new deal with Pfizer CEO Albert Bourla. Under the agreement, Pfizer will extend “most favored nation” (MFN) pricing to Medicaid, meaning the company will not charge Medicaid a higher net price than the lowest price it charges in other countries. Days later, Trump unveiled a similar arrangement with AstraZeneca.
At first glance, these deals appear to represent a major concession by two of the world’s largest pharmaceutical firms. But a closer look shows the impact on American drug spending—particularly for lower-income Americans—will be far more limited than advertised.
Why MFN pricing matters and its limitations
The adoption of MFN pricing by a Republican president marks a watershed moment for American drug policy. For years, Republican leaders resisted MFN proposals, equating them with government price controls. Trump himself unsuccessfully tried to introduce MFN pricing in Medicare during his first term. That he and his party now champion it for Medicaid underscores a significant political shift.
If other major drug companies follow Pfizer and AstraZeneca, MFN could gain broader traction. But the details matter, and the current agreements are narrow in scope.
Trump’s MFN arrangements appear to create two pathways for Americans to access lower drug prices.
First, MFN prices will apply to drugs sold in Medicaid, which covers more than 77 million Americans. However, Medicaid already secures some of the deepest discounts of any health program, second only to the Veterans Health Administration. In addition, any discounts from retail prices negotiated in other countries are confidential and likely will not be available for the Trump administration’s MFN calculations. In practice, this means MFN prices will reflect gross prices publicly available in other countries that are similar to Medicaid’s current prices, and will therefore not significantly reduce Medicaid spending. Moreover, because Medicaid patients typically face no cost-sharing, they will not see direct savings at the pharmacy counter.
Second, the administration plans to extend MFN pricing to new drugs sold directly to patients through “TrumpRx,” a government website that links consumers to manufacturers’ purchasing portals. While this sounds promising, the benefits are limited. MFN prices may be lower than what private insurers negotiate, but because insurance benefits are excluded, patients must pay the full MFN price out of pocket. For many high-cost drugs, even the “discounted” MFN price will remain unaffordable for most Americans. It is hard to imagine uninsured patients paying a similar price as Europe—$3,000 or more— for a month’s supply of Pfizer’s cancer drug Ibrance.
Moreover, other drugs accessed through TrumpRx will have prices higher than the uninsured currently pay. For example, AstraZeneca’s COPD inhaler, Breztri Aerosphere, will cost 98 percent of the MFN price on TrumpRx. The Senate Health, Education, Labor, and Pensions Committee revealed last year that AstraZeneca sold Breztri Aerosphere for $49 in the United Kingdom. If this price is in the ballpark of the MFN price that will be available for Medicaid, the TrumpRx price would be $48. While this price appears to be a significant discount for the uninsured, it is higher than the company’s own $35 out-of-pocket cap for the uninsured and underinsured in the United States, which the company implemented more than a year ago.
Additional uncertainties remain. For instance, what happens if no other country sells a drug? Our research shows that a significant share of novel drugs approved in the United States are not available in the countries included in MFN price calculations, raising questions about how prices would be set in such cases.
Taken together, these restrictions mean the agreements are unlikely to meaningfully lower drug spending for the vast majority of Americans.
Durability concerns and the path to lasting reform
Trump’s deals also face a major structural weakness: they can be undone as easily as they were signed. Unlike legislation, these company-specific agreements lack permanence.
Trump cannot run for a third term, and in just over three years another president will decide whether to maintain, expand, or abandon MFN pricing. The pharmaceutical industry’s willingness to cooperate likely stems from the Trump administration’s tariff threats. Without that leverage, future administrations may find it far harder to secure similar concessions.
Despite these shortcomings, Trump deserves credit for shifting the Republican position on MFN pricing and highlighting Americans’ frustration with high drug costs. MFN, if properly designed and expanded, could become a powerful tool for lowering prices for Medicare and private insurance.
But durable reform requires more than one-off agreements with individual drug makers. Real progress will demand congressional action to overhaul the prescription drug market. FREOPP created a comprehensive legislative blueprint to address the root causes of high prices—reforming patents, FDA processes, pharmacy benefit managers, and insurance regulations—while also implementing MFN that gives greater weight to prices in countries with free-market health systems. Such reforms can prioritize value over profits, reduce upfront R&D risks, and foster genuine innovation at prices Americans can afford.