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Experts debate Trump drug pricing policies

What will Trump’s “favored nation” policy do to drug prices and innovation? How will 340B reforms affect the price hospitals charge for drugs? Myself and my colleague Jim Baumgardner weigh in with our thoughts in an article in FormularyWatch.

“US drug prices will certainly fall. However, prices outside the US will rise,” Jason Shafrin, PhD, senior director of policy & economics at Precision Xtract, told FormularyWatch. “A naïve evaluation of the favored nation approach would assume that US prices would be required to fall to the lowest price internationally. Thus, there could be concern that consumers overall benefit, but there could be a negative impact on innovation.

The more likely result of a “favored nations” policy would be that drug makers would take a global pricing strategy in which “there is a single price that is lower than the current US price, but higher than what most or all ex-US countries pay,” Shafrin said. “If the total revenue manufacturers expect from future innovations is the same or does not change much, in this dynamic equilibrium any impacts on decreased innovation could be modest.” 


Check out the whole article here.


  1. The whole point of international indexing is that costs will be spread more evenly around the world. That’s a given. But the rallying cry of every industry faced with price constraints is that they will lead to decreased innovation. That’s all they’ve got to argue against unrestrained profits. I, for one, am not convinced. As long as there are profits to be made, there will be plenty of room for innovation, IMO.

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