How Trump’s Most Favored Nation Policy Could Impact Funding for Clinical Development

In a recent video interview with Applied Clinical Trials, Jim Kremidas, executive director, Association for MultiSite Research Corporations (AMRC), discussed the Trump Administration's ‘Most Favored Nation’ pricing policy for pharmaceuticals, which aims to match the lowest global prices to reduce costs in the US. Based on his past experience at Eli Lilly, Kremidas expressed concerns about the policy’s impact on pharma companies' clinical development and NIH funding, which could lead to reduced investment in new therapies. Kremidas also highlighted the potential of multisite clinical research corporations (MCRCs) and how they can streamline clinical operations by consolidating contracts and improving efficiency.

ACT: Can you briefly explain what the Trump administration's 'Most Favored Nation' pricing policy is trying to achieve and how do you view the potential impact of the pricing reforms on pharmaceutical companies' clinical development strategies?

Kremidas: The Most Favored Nations idea is, if you look around the world at the prices of various pharmaceutical products, you'll see there's quite a variance. The United States has always been one of the highest, most expensive places to purchase pharmaceuticals, and then there are other countries, both in the industrial nations as well as in developing nations, that have significantly lower prices. Now a quick bit of information, early in my career, when I was working for Eli Lilly, I actually worked in the pricing department for a while, and indeed, we did have different prices based on a number of factors. One, competitive pricing. Two, what the market would bear, as well as trying to understand the type of margins that we needed to make in order to continue to do our research and develop new therapies for patients in the in the future. I think what the Trump administration is trying to do—and by the way, the Biden administration actually got this started with, with the negotiations on Medicare and Medicaid pricing—is to reduce the costs to patients and to insurance companies in the United States, as well as to the government. I understand why people feel that way. The fact is that most of the US population feels like their products are too expensive, so the goal in the Most Favored Nation is to look at what is the lowest price around the world and match that price. Now, whether or not that makes sense is questionable, because some of the prices are so low in some countries that there's no way the pharma companies could actually market and sell their products that low in the United States.

If indeed these products were to be sold at a lower price, that would eat into the money that that the pharma companies and biotech companies have to invest in clinical development or research, so it could have a detrimental effect on future therapies, because there may be less money to invest in developing those therapies, so that's a concern. The other piece of that, which we didn't really touch on is a lot of the funding being cut on NIH studies, because that's where most of the early discovery takes place, and unfortunately, cutting those funds could eat into the development of new scientific concepts that would lead to new therapies, so we're kind of getting hit with a double whammy of this Most Favored Nations project or concept goes through.