President Donald Trump has touted more than $500 billion in prescription drug savings over 10 years from his policies. But the savings are largely aspirational, and not based on the more limited actions the administration has taken so far.
The administration’s most favored nation policy seeks to bring down drug prices to levels paid in other countries. The bulk of the savings, estimated in a May 5 report by the White House Council of Economic Advisers, comes from assuming that all new drugs will be sold in the U.S. at MFN prices going forward, saving $529 billion. A smaller amount of savings, $64.3 billion, comes from applying MFN pricing to Medicaid.
“People are saving a lot of money,” Trump said at a May 18 event announcing the addition of more drugs to TrumpRx, the administration’s website directing people to cash prices for prescription drugs. “Over the next 10 years, the Council of Economic Advisers estimates that our most favored nation drug policies will save Americans over $500 billion. And this has been the greatest breakthrough in lowering healthcare costs in modern history.”
“Think about the $600 billion of savings to the average American over the next 10 years,” Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, said on June 2 at an event announcing further additions to the TrumpRx website, while calling on Congress to codify MFN pricing.
“It’s just a massive number that they voluntarily, sort of, gave back because the president went after them and said: ‘You got to deal with this problem,’” Oz continued, referring to the president’s negotiations with drug companies.
There isn’t evidence that drug companies have agreed to give back $600 billion in savings to Americans, much less savings that will go to “average” Americans. So far, the administration has made voluntary deals with 17 drug companies to lower drug prices. The White House and the companies have reported commitments to launch new drugs at MFN prices, as well as to offer MFN prices to states for Medicaid. However, the details of the deals have not been disclosed, and some companies have reported that they end after three years.
“Right now we just have a lot more questions than we have answers, and that makes it really difficult to assess the validity or accuracy or even ballpark-ness of this very large estimate of savings in the White House report,” Juliette Cubanski , vice president and director of the Program on Medicare Policy at the health policy organization KFF, told us. She added that it’s difficult even to evaluate the impact of the current voluntary deals given a lack of answers to key questions, such as “how many of these manufacturers’ drugs are subject to MFN pricing.”
When asked for more details on what has been done so far to achieve the savings in the report, White House spokesperson Kush Desai told us that “the research report lays out all of the assumptions underlying this analysis.” CMS did not respond to our request for comment.
The hundreds of billions in savings calculated in the CEA report do not come from offering people discounts on TrumpRx. As we’ve written previously , the prices on the site for brand-name drugs negotiated under the administration’s voluntary deals only represent savings for individuals in a few specific situations, such as when paying for fertility or weight loss drugs not covered by insurance, since many people will get better prices by using insurance rather than paying in cash. The CEA analysis only attempted to calculate 10-year savings from TrumpRx for Americans paying for fertility treatments, estimating these savings at $4.6 billion.
TrumpRx also recently started pointing people toward existing websites to access discounts on generic drugs. But as the CEA analysis itself acknowledged, generics are already cheaper in the U.S. than in other high-income countries, and they are not a target of MFN policies.
The U.S. does generally pay more for brand-name drugs than other nations. Prices in 2022 for these drugs were more than three times higher in the U.S. than in other high-income nations after adjusting for rebates, according to an analysis from the research organization RAND. But it is not clear how policies aiming to equalize drug prices will play out. As we have written previously, the president has repeatedly claimed broad victories over drug prices, even though they are hardly a done deal. There are significant uncertainties with his MFN approach, which still requires legislative action to further implement.
“We’ve seen no indication from pharma, from other key stakeholders, that this $600 billion number is real,” Jeromie Ballreich , an associate professor in the department of health policy and management at Johns Hopkins Bloomberg School of Public Health, told us, saying that one would expect companies to disclose to shareholders such an impact, which would be about 10% of U.S. pharmaceutical company revenue. “You would hear it outside of the W…
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