President Donald Trump’s proposal to peg American drug costs to the lowest prices paid in other countries could devastate Medicaid’s drug rebate program, health policy watchers say.

Under the program, drugmakers agree to offer state Medicaid agencies the lowest drug price charged to any client in exchange for access to Medicaid beneficiaries. These discounts often go to health facilities that serve low-income populations under Section 340B of the Public Health Service Act.

The Trump administration hasn’t yet provided details on the most-favored-nation pricing policy, and it could face constitutional or procedural challenges. But such an unnatural price control is almost certain to affect the choices of drugs available if allowed to enter the US market, policy watchers say. In that case, drugmakers might leave the Medicaid drug rebate program entirely, and those that stay might limit sales to providers treating Medicaid populations or cut list prices to reduce the rebates paid to states if or when drug costs rise faster than inflation.

“The Medicaid drug rebate program and, by extension, the 340B program are built on the premise that those programs will receive best-in-class discounts in the marketplace,” said Antonio Ciaccia, CEO of the drug pricing research group 46brooklyn. Therefore, any move to extend an international best price across the US health-care ecosystem would cause those programs to collapse, he said. Read More