Trump ramps up MFN drug pricing rhetoric as Administration prepares Medicare models and Democrats respond
As Republicans fear backlash from voters heading into crucial 2026 midterm elections, President Trump is turning to one of his favorite populist issues: price controls on prescription drugs. While CMS prepares to potentially release two Most Favored Nation (MFN) drug pricing models in Medicare before the end of the year, Trump took to his social media account on Truth Social over the weekend declaring himself the “affordability President” and taking credit for what he perceives are lower drug prices. “Because I have invoked MOST FAVORED NATIONS STATUS FOR THE UNITED STATES OF AMERICA, DRUG PRICES ARE FAILLING AT LEVELS NEVER SEEN BEFORE, 500%, 600%, 700% and more,” Trump wrote. He also claimed that “if this story is properly told”, Republicans should “win the Midterm Elections with RECORD NUMBERS.” (all emphasis is his). The President (and Democrats) clearly see drug pricing as a winning issue, and Gridiron expects the rhetoric and policy proposals to ramp up as we enter the new year. While the Administration has already released a voluntary CMS Centers for Medicare & Medicaid Innovation (CMMI) MFN program for Medicaid, the Generating Cost Reductions for U.S. Medicaid (GENEROUS) model, two more rules await final sign off by the White House. We expect the two anticipated rules will impact Medicare Part B and Medicare Part D. Meanwhile, Congressional Democrats are trying to one up the President by introducing their own legislation, the Lowering Drug Costs for American Families Act. The bill would expand drug pricing provisions in the Inflation Reduction Act (IRA), extend drug negotiation prices to the commercial market, cap all out of pocket costs at $35 per prescription, require the HHS secretary to consider international price differentials in negotiating Medicare’s Maximum Fair Price (MFP) for selected drugs and remove new protections for orphan drugs in Medicare drug price negotiations. While the CMMI models need close monitoring, the Democratic bill will not advance, at least not until 2027. The main concern for the biopharma and patient community: legislation that would codify problematic Most Favored Nation (MFN) policies through federal legislation. Bills, with bipartisan support, have been introduced in both the House and Senate. While those bills won’t move in the short term, legislative action addressing the price difference Americans pay for prescription drugs compared to the rest of the world will be a major threat over the next two to three years.
State Medicaid programs focus on implementation and budget challenges from “One Big Beautiful Bill Act (OBBBA)”
State Medicaid officials are bracing for a major cost shift thanks to the One Big Beautiful Bill Act, which is estimated to cut up to an estimated $1 trillion in Medicaid spending over the next 10 years. With policy changes like work requirements and more frequent eligibility redeterminations, states expect to spend a significant amount more on Medicaid to ensure their staffing and public education campaigns, among many other supporting tasks, are ready for the new policies. State Medicaid directors shared varying perspectives on how their states plan to address the increased responsibilities and changes required by OBBBA at the National Association of Medicaid Directors annual meeting in Maryland last week. Some of the major Medicaid changes will go into effect on January 1, 2027, leaving state agencies little time to plan and requiring state legislatures to make funding decisions in an “off year” when many state legislatures meet for shorter legislative sessions. Click here to see when your state legislature will meet in 2026. As we’ve discussed previously, the impact of the OBBA provisions will impact some states more than others, with the biggest hit expected in states that expanded Medicaid over the last decade under the Affordable Care Act (ACA) incentives. The 10 states that did not expand Medicaid will face a slightly smaller impact. As states prepare for 2027, Gridiron encourages industry stakeholders to consider partnering with appropriate patient partners to identify ways to best inform patients and care partners, especially in vulnerable communities. Relying solely on the limited resources of state Medicaid agencies to inform and empower patients and families won’t cut it. To schedule a more detailed presentation on the OBBA’s various Medicaid provisions, please contact us to get on the schedule.
Long-awaited vote on expiring Affordable Care Act subsidies likely before Christmas
Senators on both side of the aisle expect to vote on continuation of the ACA subsidies, a promise key Democrats secured to re-open the federal government two weeks ago. However, what the bill will look like and whether ongoing discussions with the White House will result in a compromise proposal remains to be seen. Democrats want a vote on their proposal, which would permanently extend the subsidies, to use as a campaign issue in 2026. Senate Republicans are likely to try to coalesce around a White House-driven compromise, the details of which are still being discussed. We expect Sen. Bill Cassidy (R-LA) to play a pivotal role in any middle-ground proposal that emerges in the Senate. On the House side, Speaker Mike Johnson (R-LA) has told the White House that the exceedingly slim House GOP majority doesn’t support extension of the subsidies in any form. However, 86 House Republicans told the White House that they support efforts to address the subsidy “cliff” with a compromise approach. There is a bipartisan House bill sponsored by Republican Main Street Caucus member Rep. Don Bacon (R-NE) that would extend the subsidies, but phase out support for higher earners. The bill is also sponsored by Reps. Tom Suozzi (D-NY), Josh Gottheimer (D-NJ) and Jeff Hurd (R-CA), members of the bipartisan Problem Solvers Caucus which Bacon is also a member of. The legislation would extend the subsidies for two years and phase out the subsidies for those who make between 600% FPL and 935% FPL, as well as implement anti-fraud reforms. It’s uncertain that a compromise approach, along the lines of what is being floated by Rep. Bacon, would garner enough Democrat support in the House, as many Democrats push for an “all or nothing” approach to addressing the subsidy cliff.
Health Policy Snippets
- Bipartisan bill to regulate Step Therapy introduced again in Congress. Bipartisan bills in both the House and Senate have again been reintroduced to rein in insurer step therapy or fail first practices. The “Safe Step Act” has garnered support from dozens of senators and representatives in past sessions, but has not advanced. Health care providers, including oncologists, have joined patient groups in calling for congressional action, citing the increasing use of step therapy in cancer care. The majority of states have passed some sort of step therapy reform laws, but those laws only apply to state-regulated plans, leaving the vast majority of covered lives unprotected from step therapy abuses.
- Biotechnology Commission calls for action to stem loss of innovation leadership to China. The National Security Commission on Emerging Biotechnology issued a report on November 25 that calls for overhauling and streamlining the federal research grant process and leveraging artificial intelligence to help the United States recapture its innovation edge on China. The biotech commission warns the United States is falling behind China in biotechnology and science, and suggests policies aimed at three goals: making the federal government a better partner in science and technology, enabling autonomous scientific discovery and expanding opportunities to participate in science. The NSCEB was created by Congress as independent advisory commission in 2022. Its report is further evidence of widespread concern on Capitol Hill that China’s advancements in biotechnology are a national security issue. Gridiron’s take: If we all agree that China’s biotechnology advancements are a threat to national security, does it make sense to continually push proposals that weaken the U.S. biotech/biopharma ecosystem and make it more difficult for companies to prosper in the U.S.? Shouldn’t we be ensuring that the U.S. innovation ecosystem is positioned for success? Don’t anti-innovation U.S. policies further drive companies out of the U.S. and toward partnership with foreign partners? We’ll keep asking these questions…
