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

These and other IRP system features will determine the final IRP drug prices under Trump’s MFN plans. They are examined in minute detail in GlobalData’s IRP360 country profiles, which are regularly updated when regulations change – as they frequently do.

So far, the Trump administration has only provided the formula (i.e., achieving lowest price among reference countries), but all other aspects of the IRP system are subject to conjecture. Without the details for the mechanism specified, it is impossible to precisely quantify the impact of IRP introduction in the US.

However, two outcomes are obvious, even at this early stage.

One detail that may have escaped US policy makers is that IRP works by affecting the list price – i.e., the “official” price – of a medicine. US list prices are undoubtedly higher than those in other countries for most originator medicines; however, they are not the real prices. Pharmaceutical manufacturers provide significant discounts, which are at the moment internalised as profit by various third parties involved in the US pharmaceutical distribution process.

By forcing the pharma industry to lower US list prices, the Trump administration would be directly hitting the profits of pharmacy benefit managers (PBMs) and private health insurers. The reason for this is that pharma companies, faced with strong pressure on the list price, would have no choice but to cut the confidential discounts they grant to third parties.

In other countries, the introduction of IRP in the US would only affect list price levels marginally, but it will cause launch delays – an adverse effect of IRP that disproportionately affects patients in low-priced, frequently referenced markets. This effect will occur because once the basket of reference countries that the US plans to reference becomes clear, companies will be motivated to keep prices in these countries high, in a bid to protect their US prices. However, companies may not be able to keep prices high if most countries in the US reference basket have strong price control measures and themselves use IRP to set drug prices. Therefore, Pharma’s only recourse to safeguard US prices will be to delay launching affected products in the countries the US is referencing, or to remove the specific packs/formulations the US is referencing from those markets, or both.

To employ an often-used Trump figure of speech: politicians don’t hold all the cards. The pharma industry has some cards in its hand, and how it chooses to play them will determine the outcome of Trump’s IRP policy.

“Trump revives plan for IRP use in US via MFN executive order” was originally created and published by Pharmaceutical Technology, a GlobalData owned brand.

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