Indian drugmakers see potential tail wind in Trump’s MFN drug pricing plan

“He clearly said that the developed world needs to be equalised,” said Kiran Mazumdar-Shaw, Executive Chairperson of Biocon and Biocon Biologics. “He also said, ‘I want to get rid of the middleman.’ That helps us.”

Direct-to-government sales could open new channels

Mazumdar-Shaw emphasised that Biocon’s biosimilars and generics are already priced similarly across the U.S. and Europe, insulating the company from pricing pressure under the MFN model.

“If manufacturers can directly sell to Medicare, Medicaid, it’s a big opportunity,” she said.

Cipla’s leadership echoed similar sentiments. Global CEO and managing director Umang Vohra said the executive order is unlikely to impact generics negatively and may, in fact, favour them.

“Generics are quite honestly a beneficiary of that order because it creates a market where generic drugs would be preferred,” Vohra said during the company’s earnings call. He also added that prices of drugs the company sells in US and other developed countries is almost similar.

Middlemen in crosshairs

Both executives pointed to the role of intermediaries in inflating drug prices. Trump’s plan to eliminate these intermediaries could shift the balance of power toward manufacturers.

While the full details of the executive order are yet to be released, Indian pharma leaders are cautiously optimistic.

“It’s too recent to fully assess,” Vohra said. “But we believe that in the long run, generics will be a beneficiary.”

Mazumdar-Shaw added that Biocon has not seen any direct impact yet but expects exemptions similar to those granted in the UK.

“In the case of the UK, he exempted pharma. I expect he will do the same for India,” she said.

Trump’s MFN drug pricing policy, announced via executive order in early this week, aims to dramatically reduce prescription drug prices in the U.S. by benchmarking them to the lowest prices paid by other developed nations. The order is primarily targeted towards branded or patented drugs that the order says three time more expensive in US than in other advanced countries.

The order allows direct-to-consumer sales at MFN prices, bypassing traditional intermediaries like pharmacy benefit managers (PBMs) and wholesalers.

The order puts pressure on drug manufacturers to voluntarily lower prices or face regulatory action.
If implemented, the policy could significantly reduce the role of PBMs in pricing negotiations, shifting power toward manufacturers and government payers like Medicare and Medicaid.
PBMs, which negotiate rebates and manage formularies for payors like insurance companies and government, are under scrutiny for sometime in US, for alleged lack of transparency and not passing on the benefit of rebates they get from manufacturers.

Many analysts have pointed out the MFN pharmaceutical drug pricing, can be difficult to implement due to several factors, including legal challenges, industry resistance, and the complexity of comparing drug prices across different countries.