President Donald Trump has pledged to make American prescription drug prices the lowest on the planet, but a closely watched government pilot program is revealing just how hard it may be to get the entire pharmaceutical industry on board.
The Trump administration managed to secure agreements with 17 of the world’s largest drugmakers, committing them to offer prices comparable to what other developed nations pay — a concept known as “most-favored-nation” pricing. But efforts to bring smaller and mid-sized companies into the fold have been slow, with industry lobbyists pointing to a lack of enthusiasm from those companies.
The White House says the deals already signed cover roughly 86% of the U.S. branded drug market by sales and could generate $64.3 billion in combined federal and state savings over the next decade — though analysts note that figure is speculative. About half of those projected savings would need to come from state governments, which have until September to decide whether to join the program.
The application window for the U.S. Centers for Medicare and Medicaid Services’ pilot — which covers more than 80 million low-income Americans through Medicaid — was extended twice from its original March 31 deadline before closing on June 11. Participating companies would agree to offer Medicaid drug prices in line with international rates for five years.
SMALLER COMPANIES SEE LITTLE INCENTIVE
Ionis Pharmaceuticals CEO Brett Monia told Reuters his company was invited to participate but decided against it. “We don’t have the breadth of drugs on the market that we can cut deals,” he said. “But at the end of the day, we don’t see the upside of cutting a deal.”
Monia noted that mid-sized companies like his are actually responsible for developing most new innovative medicines, but they operate under different business models than large pharmaceutical firms. Many rely on licensing arrangements with overseas partners to sell their drugs outside the United States, making international pricing comparisons more complicated.
Four industry lobbyists confirmed that based on feedback from pharmaceutical companies, mid-sized and smaller drugmakers have largely stayed on the sidelines. With fewer drugs in their portfolios than major competitors, cutting prices could significantly hurt their financial performance.
“There is no real upside,” one lobbyist said, speaking anonymously because they were not authorized to comment publicly. The lobbyist added that companies are likely to “steer away” from any voluntary program that limits their ability to set their own prices.
A spokesperson for CMS pushed back, saying drug manufacturers showed “robust interest” in the program and that the agency received a significant number of applications.
WHICH COMPANIES APPLIED?
Reuters contacted 19 of the next largest drug companies. Of those, only Japan’s Astellas confirmed it had applied. Astellas’ biggest product, a prostate cancer drug called Xtandi, was developed alongside Pfizer — which had already signed a deal with the administration. U.S. sales make up about 45% of Astellas’ 2025 revenue.
“We determined that this application represents the most constructive path forward in a complex and rapidly evolving policy environment,” an Astellas spokesperson said.
Germany’s Bayer and Japan’s Daiichi Sankyo said they were still weighing their options, even though the application deadline had already passed. The remaining 15 companies either declined to comment or did not respond.
Analysts have pointed out that the pilot’s real-world impact may be limited anyway, since Medicaid already receives discounts of more than 80% off list prices in some cases — potentially putting those prices close to what foreign countries already pay.
LEGAL CHALLENGES LOOM
Companies that choose not to join the Medicaid pilot could face two other CMS programs that may be mandatory, potentially setting drug prices for the larger Medicare program — which serves older Americans — as soon as October. Medicare drug spending runs roughly two to three times the size of the Medicaid program.
Industry groups PhRMA and BIO have argued these programs would be unlawful. BIO has written to CMS contending the programs exceed the agency’s legal authority and raise constitutional concerns — arguments similar to those it made against elements of former President Joe Biden’s Inflation Reduction Act, which also pushed for drug price reductions in Medicare.
Pharmaceutical pricing consultant Brian Reid said some companies may simply be waiting to see how the programs unfold and whether legal challenges gain traction before committing to any agreement.
“This is a pretty extraordinary use of CMS’s power that hasn’t quite been tested,” Reid said. “That’s not the same as saying legal challenges would succeed, but there’s certainly a lot of questions that have never been litigated before.”
