Drug companies sign “Most Favored Nation” deals, then raise prices anyway

Drug prices are one of the rare points of overlap between President Joe Biden and President Donald Trump: both have said Americans pay too much. And they do. U.S. patients pay more than three times what people in other developed nations pay for brand-name drugs, even after accounting for rebates, according to a 2024 RAND Corporation analysis.

What politicians disagree on is how to fix it, and the results have been mixed. On December 19, 2025, President Trump announced that 14 of the 17 largest pharmaceutical companies had signed “most favored nation” pricing agreements. “This represents the greatest victory for patient affordability in the history of American health care by far,” Trump declared at a White House event.

Twelve days later, Reuters reported that drugmakers were planning to raise prices on at least 350 branded medications starting January 1, including companies that had just signed those deals.

Three administrations, three approaches

Trump and Biden have taken different approaches to lowering drug pricing. Biden’s Inflation Reduction Act of 2022 created a legally enforceable framework with published negotiated prices, specific drugs and statutory penalties for non-compliance. Trump’s MFN deals are voluntary. Terms remain largely confidential, and enforcement limited to the threat of tariffs, which participating companies have already been granted a three-year suspension from.

What’s already locked In: IRA negotiated prices

Separate from the MFN deals, Medicare’s first-ever negotiated drug prices, a product of the Biden-era Inflation Reduction Act, take effect January 1, 2026. These discounts are statutory, not voluntary:

CMS will negotiate prices for 15 additional drugs in 2027, another 15 in 2028 and 20 per year starting in 2029. The law also capped Medicare Part D out-of-pocket costs at $2,000 annually (effective 2025) and limited insulin copays to $35 per month.

The MFN deal paradox

The Trump administration’s MFN agreements cover 14 companies: Pfizer, AstraZeneca, EMD Serono, Novo Nordisk, Eli Lilly, Amgen, Boehringer Ingelheim, Bristol Myers Squibb, Genentech (Roche), Gilead Sciences, GSK, Merck, Novartis and Sanofi.

The deals commit these companies to offer “most favored nation” pricing, matching the lowest prices they charge in other developed countries, for Medicaid and cash-paying customers through a forthcoming TrumpRx.gov portal. In exchange, participating companies received a three-year suspension of potential pharmaceutical tariffs and committed to over $150 billion in U.S. manufacturing investments.

But the deals don’t require companies to lower, or even freeze, their list prices on existing products. And according to Reuters reporting based on data from 3 Axis Advisors, at least five of the 14 deal-signers are raising prices on January 1, 2026:

For instance, Boehringer Ingelheim is cutting Jardiance’s list price by more than 40%, but that’s driven by the IRA’s Medicare negotiation requirements, not the MFN deal. Other Boehringer products are still seeing increases.

“These deals are being announced as transformative when, in fact, they really just nibble around the margins in terms of what is really driving high prices for prescription drugs in the US,” Dr. Benjamin Rome, a health policy researcher at Brigham and Women’s Hospital, told Reuters.

The coverage gap

Perhaps the most significant limitation of both approaches: neither directly addresses prices for the majority of Americans.

The IRA targets Medicare: 65 million beneficiaries. The MFN deals target Medicaid and cash payers, potentially 112 million people, though Medicaid already has rebate mechanisms that push net prices down. Neither directly addresses the 155 million Americans with commercial insurance, who will continue to face whatever prices their insurers negotiate.

The January 1 reality

Drug prices in the U.S. consistently increase faster than inflation. According to 46brooklyn Research, a nonprofit that tracks drug pricing, January 2025 saw 583 brand drug price increases. That is the most Jan. 1 increases on record going back to 2011.

The 2025 median of 4.0% was described by 46brooklyn as an “all-time low”—yet it still exceeded that year’s 3.0% CPI inflation by 33%.

What comes next

The full impact of both approaches remains to be seen. Johnson & Johnson, AbbVie and Regeneron, which are three of the 17 companies that received MFN letters, have not yet announced deals. Trump indicated J&J would announce soon; the other two have not made public statements. Meanwhile, 46brooklyn and other researchers will be tracking January 2026 price changes as they’re reported. The data will show whether the “most favored nation” commitments translate to any meaningful restraint—or whether, as one health policy researcher put it, they simply “nibble around the margins.”

Data sources: 46brooklyn Brand Drug List Price Change Box Score; CMS Medicare Drug Price Negotiation Program; Reuters/3 Axis Advisors; RAND Corporation

Methodology note: Price increase counts refer to wholesale acquisition cost (WAC) changes, which represent list prices before rebates and discounts. Net prices paid by insurers and patients may differ substantially. Coverage population estimates based on CMS and Census data.