President Donald Trump has pledged to make U.S. prescription drug prices the lowest in the world. A pilot program run by the U.S. Centers for Medicare & Medicaid Services (CMS) that would align Medicaid prices with those paid in other developed nations - commonly described as most-favored-nation pricing - has exposed the limits of that ambition among mid-sized and smaller drug manufacturers.
The White House says 17 of the largest global drugmakers agreed to price arrangements that the administration views as comparable to foreign rates, and that those agreements represent about 86% of the U.S. branded drug market by sales. Officials project the program could produce $64.3 billion in federal and state savings over the next 10 years. That figure is speculative and rests on assumptions that may not hold: roughly half of the claimed savings would accrue to state governments, which still have until September to decide whether to join the pilot, and the program itself runs for five years while the administration’s savings estimate covers a 10-year span.
CMS extended the application window for manufacturer participation twice from an initial March 31 deadline, finally closing applications on June 11. Under the pilot, participating manufacturers would provide Medicaid with prices indexed to what other countries pay for a five-year period, applying those reduced prices to the more than 80 million Americans covered by the program.
Despite overtures from the administration, several mid-sized and smaller companies have been hesitant to commit. Brett Monia, chief executive of Ionis Pharmaceuticals, told Reuters that his company and others were invited to reach arrangements but declined, saying: "We don’t have the breadth of drugs on the market that we can cut deals." Monia added: "But at the end of the day, we don’t see the upside of cutting a deal." He noted that companies of Ionis’ scale account for development of many new innovative medicines but operate under different business models than large pharmaceutical firms and often rely on licensing agreements with overseas partners to sell drugs outside the United States.
Lobbyists with close ties to the industry said mid-sized and smaller drugmakers have largely not been lining up to enroll. Four lobbyists, speaking about feedback from pharmaceutical companies, told Reuters that firms with a smaller portfolio fear a price concession could have an outsized effect on profits. One lobbyist, speaking anonymously because they were not authorized to speak publicly, summarized the sentiment: "There is no real upside," and added that companies are likely to "steer away" from any voluntary initiative that restricts pricing autonomy.
CMS, however, pushed back on a narrative of weak interest, saying a spokesman had heard drug manufacturers express "robust interest" in the model and that the agency received a significant number of applications from manufacturers.
The Medicaid pilot is one element of a broader White House push targeting most-favored-nation approaches and a reduction in U.S. drug spending. Medicaid alone accounted for about $60 billion in drug spending in 2024, underscoring the program’s fiscal significance.
When Reuters asked 19 of the next-largest drug firms about the pilot, only Japan’s Astellas confirmed it had applied. Astellas’ largest medicine, the prostate cancer treatment Xtandi, was developed and commercialized in partnership with Pfizer, which previously signed an agreement with the administration. U.S. sales represented about 45% of Astellas’ 2025 revenue. An Astellas spokesperson said by email: "We determined that this application represents the most constructive path forward in a complex and rapidly evolving policy environment."
Germany’s Bayer and Japan’s Daiichi Sankyo, two other companies with substantial U.S. operations, said they were still assessing their options despite having missed the application deadline. The remaining 15 companies contacted by Reuters either declined to comment or did not respond.
Details of the price commitments made by the large drugmakers are not public. Analysts who have examined the pilot note that the program’s effect could be muted because Medicaid discounts already reach very deep levels in certain cases - sometimes exceeding 80% off list price - which in some instances would put Medicaid prices close to amounts foreign governments pay, where prices are often roughly one-third of U.S. levels.
Manufacturers that avoid the voluntary Medicaid pilot face the prospect of two other CMS pilot programs that could impose prices for drugs covered by Medicare as soon as October. Because Medicare drug spending is roughly two to three times the size of Medicaid drug spending, the potential financial implications for manufacturers and government budgets are substantial.
Industry trade groups including PhRMA and BIO have argued that these CMS initiatives exceed the agency’s statutory authority and would be unlawful. BIO specifically argued in submissions to CMS that the pilot programs violate constitutional principles, and it has made related arguments in response to pricing measures contained in prior federal legislation.
Some companies, a pharmaceutical pricing consultant said, may be waiting to see how CMS implements these initiatives and whether legal challenges succeed before committing to binding price agreements. Brian Reid, a consultant in this field, said: "This is a pretty extraordinary use of CMS’s power that hasn’t quite been tested. That’s not the same as saying legal challenges would succeed, but there’s certainly a lot of questions that have never been litigated before."
Context and immediate implications
The pilot illustrates a tension between the White House’s policy goals and the business calculations of smaller manufacturers. While large multinational drugmakers appear to have reached arrangements with the administration, mid-sized firms - which are responsible for a large share of early-stage innovation - are signaling reluctance because the trade-offs for them may be more acute.
Key near-term uncertainties include whether enough states opt into the pilot to achieve the projected savings, whether smaller players will join in meaningful numbers, and whether legal challenges will limit CMS’s authority or delay implementation.