A modelling study published in The Lancet has warned that the United States' new "Most‑Favoured‑Nation" pricing policy for Medicare could prompt pharmaceutical manufacturers to change global pricing and launch strategies, potentially driving prices up or delaying access in other countries.
Key findings from the modelling
The study, reported by news‑medical.net and published in The Lancet, modelled two versions of the policy — labelled GLOBE (for medicines administered in hospitals and clinics) and GUARD (for medicines dispensed at pharmacies). It estimated that, in the policy's initial phase covering about 25% of Medicare beneficiaries, the reforms could reduce Medicare prescription spending by:
- $5.2 billion (about a 16% cut) under the GLOBE model, and
- $6.4 billion (about an 18% cut) under the GUARD model.
The paper projected that if the policy were expanded to all Medicare beneficiaries the savings could grow to $21 billion under GLOBE and $25.5 billion under GUARD.
| Scenario | Estimated savings | Percentage |
|---|---|---|
| GLOBE (initial 25%) | $5.2 billion | 16% |
| GUARD (initial 25%) | $6.4 billion | 18% |
| GLOBE (full expansion) | $21 billion | — |
| GUARD (full expansion) | $25.5 billion | — |
Potential global consequences
The authors modelled how the US policy ties Medicare payments for brand‑name medicines to prices charged in comparable high‑income countries, adjusted for purchasing power. The study reported that for roughly three in four medicines analysed, the US savings would be worth nearly four times the medicine's annual sales in the country used to set the reference price. That magnitude of impact could create strong incentives for manufacturers to alter international pricing and launch decisions.
In practical terms, the modelling suggests two main industry responses that could affect markets outside the USA:
- Manufacturers might raise prices in other high‑income countries to avoid lowering the US benchmark;
- Companies could delay or forgo launching new medicines in countries whose prices are used as comparators.
Either response would have knock‑on effects for procurement and affordability in middle‑income and low‑income markets, including nations that rely on international reference pricing or look to high‑income markets when negotiating public sector prices.
Effect of confidential agreements
The study noted that reported confidential deals between the US administration and some manufacturers could substantially reduce the policy's projected savings. For the initial group of 17 manufacturers with announced agreements, the modelling estimated that Medicare's overall savings could be cut by 71%.
That caveat illustrates how real‑world policy outcomes depend on negotiations and commercial arrangements as much as on the formal mechanics of pricing rules.
Why this matters to South Africa
South Africa's public and private procurement systems operate in a global market. Changes to pricing benchmarks or manufacturer launch behaviour in major markets such as the USA can influence what medicines are available locally and at what price. Policymakers, procurers and health advocates should therefore monitor developments closely as the rule is implemented and as companies respond.
While the modelling focuses on Medicare and US policy design, its central message is global: rules that alter incentives in the world's largest pharmaceutical market may reshape manufacturer strategies everywhere, with consequences for access and affordability beyond US borders.
The study was reported in news‑medical.net and published in The Lancet. Its projections are modelled estimates and, as the authors acknowledge, depend on assumptions about how manufacturers and governments will behave.
