Q&A: How Complex US Drug Market Impedes MFN Pricing Policy

Due to their life-saving effects, prescription drugs around the world have always required some sort of out-of-pocket patient costs to ensure the dispensing of these medications. However, US drug prices have historically been the highest of all developed nations, leading experts and policymakers to further hash out the most favored nation (MFN) drug pricing policy.

“[It’s] very complicated. I wish we could nail it down to just MFN and say, ‘Hey, we just do this and we're done,’” Ron Lanton III, Esq, partner at Lanton Law, told Drug Topics. “It's just been a factor of how our health care system has developed over the years, since the ‘30s.”

Throughout President Donald Trump’s last 2 administrations, his focus on the MFN policy has persisted as leading health officials continue to try to manipulate US drug prices for the benefit of patients. In part 2 of our interview with Lanton, he provides further nuance as to why US patients have always paid more than foreign countries.

Furthermore, Lanton gave his insights into why other countries and their governments have realized much more affordable medications than those in the US. From a complex drug market to the government’s attempts at intervention, learn from Lanton as to why bipartisan momentum for lower drug costs has essentially stalled due to unique, American complexities.

READ MORE: Why Trump’s Second Term is Different for the MFN Drug Pricing Policy

Drug Topics: The MFN policy is solely reliant on the prescription drug prices of countries outside of the US. How come the US and its patients have historically paid more for their prescription medications?

Ron Lanton III: This question reminds me of a question; I'm actually just now remembering it. I was sitting on a long plane trip, and we were talking about what we did, and I talked to them about how I was in pharmaceuticals, and they were like, ‘Why are drugs so expensive?’ It's a complicated question because there's so many variables into why drug prices are so high. When it comes to MFN, we don't really know. We don't know what those standards or metrics are going to be in order to attain a true MFN. We just keep hearing about it, and we keep hearing about all these other ancillary issues around MFN.

But when you talk about drug prices and why things are so high here in the United States, one: we have a larger population. Whether or not that's a fair standard in judging whether we should be the highest [in cost] or not, that actually does play a factor into it. We have brand patent thickets that make it very hard for generic companies, and of course now biosimilar companies, to come in and try to introduce a competitor on the market. Of course, there takes time to get a generic to come to market, notwithstanding all the legal challenges. We have a public-private health care system that relies very heavily on under-regulated pharmacy benefit managers. I don't want to say non-regulated because states have really stepped up the efforts lately in order to do so. But there's not a lot of transparency, and there's spread pricing, and there's all kinds of things that have happened in order to help drive those costs up.

We also have to look at the fact that there's been a lot more innovative medicines that have come to market. [If you] look at it, these things are near curative. We're getting better innovation, better science, and I think that the US also serves as pharma’s innovation market, where drugs are priced higher in order to capture all the risk from research and development. So, [it’s] very complicated. I wish we could nail it down to just MFN and say, ‘Hey, we just do this and we're done.’ It's just been a factor of how our health care system has developed over the years, since the ‘30s.

Drug Topics: On the other side of that coin, how have certain countries succeeded in making affordable drug prices for their patients? Furthermore, do you know specific examples of countries where patients are unburdened by drug pricing?

Ron Lanton III: I think most other countries have what we don't have, which is government cost containment protocols—so you actually have a government in play that are pushing the prices down. Because we have a free market in the US here, that's not something that we really can do. Although, the Trump Administration is really trying to get around that by threatening and just sort of jawboning. [It’s] a lot of talk to manufacturers, saying, ‘If you don't do this, then we're going to do this.’ So it's really the fear factor that's driving that.

I don't know if a country is necessarily unburdened by drug pricing or not, because patients are still absorbing some kind of cost. But I think the US is starting to look at other countries when it comes to developing these types of policies. For example, the Centers for Medicare & Medicaid Services (CMS) has identified an MFN basket as the OECD (Organization for Economic Co-operation and Development) countries. Those are a group of countries with a gross domestic product (GDP) per capita of about 60% of the US GDP ratio. This basket is about 25 countries. Basically, the impact would be dependent on these countries in setting the reimbursement rate per drug, and then seeing whether or not we could match that with our MFN, and if that would actually bring the pricing down.

I think they have a good start in trying to look at a basket of countries. I remember the first Trump Administration; he was pushing this idea. And then, of course, on the other end of the spectrum, we have Senator Sanders, the independent from Vermont, that was pushing this as well. I think at that time, it was something like 18 countries. So, now it's 25. I don't know if there's really a magic number or not. I think it's really about outcomes, and what countries are putting in the protocols to drive that down. But again, that's going to be a different market than ours.

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