Medicare drug pricing shift carries alarming global risk

20 Sep 2026, 15:03 · The Fresno Bee

Washington has repeatedly tried to bring down prescription costs for seniors, but each round has faced strong industry resistance and legal challenges.

The Trump administration’s Most Favored Nation (MFN) policy for Medicare is the boldest attempt yet to align US drug prices with foreign benchmarks.

A Lancet analysis warns that confidential manufacturer exemptions could erode most of the promised Medicare savings, while also giving drugmakers reason to raise prices abroad.

For the roughly 70 million people covered by Medicare, according to CMS’s Medicare Monthly Enrollment data, the promised discounts under the Trump MFN drug-pricing policy hinge on how drugmakers, foreign governments, and federal courts respond in the coming months.

Published September 13, 2026, the Lancet study arrived as the pricing rules await likely legal challenges from major drug manufacturers over their design.

How GLOBE and GUARD would change Medicare drug pricing

Under Global Benchmark for Efficient Drug Pricing (GLOBE) and Guarding US Medicare Against Rising Drug Costs (GUARD), the study confirmed that a randomly selected 25% of Medicare beneficiaries would be covered during the initial five-year phase of the Trump policy.

GLOBE covers medicines given in hospitals and clinics under Medicare Part B, while GUARD covers prescription drugs bought at the pharmacy through Part D.

Both models require manufacturers to pay Medicare additional rebates when net drug prices exceed the lowest list price in a 19-country reference basket, with the aim of closing the long-standing US-foreign drug price gap, the Lancet study showed.

Because manufacturers’ rebates and discounts stay private, the researchers estimated Medicare’s net prices before comparing them with prices in the reference basket.

Medicare, the federal health program for older and disabled Americans, could not negotiate drug prices until the 2022 Inflation Reduction Act (IRA) allowed limited talks.

The MFN framework moves beyond that step, using foreign price benchmarks to determine what Medicare pays for brand-name drugs.

Initial MFN Medicare savings pegged at $11.6 billion before manufacturers react

The Lancet modeling study analyzed 195 patented drugs that account for $87.9 billion of Medicare’s annual prescription drug spending.

Without any exemptions, the policy could save Medicare $5.2 billion under GLOBE and $6.4 billion under GUARD in its initial 25% phase, the researchers estimated.

More Medicare/Medicaid:

Expanding those rules to all Medicare enrollees could increase potential savings to $21 billion under GLOBE and $25.5 billion under GUARD, the paper indicated.

The lowest international benchmark price ran 71% below what Medicare pays, with South Korea, Norway, and Australia most often referenced in the study’s modeling.

The 195 drugs account for $32.7 billion in annual Medicare Part B spending covered under GLOBE and $55.2 billion in Part D spending under GUARD.

GLOBE and GUARD are built to close that gap, using foreign benchmarks to reset what Medicare pays.

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MFN math gives drugmakers a direct reason to raise foreign prices

For 73% of the 138 medicines with sales data, projected Medicare savings exceeded each drug’s annual revenue in its reference country, the study found.

Across that same group, projected Medicare savings averaged 3.8 times the drug’s total annual sales in its reference country, the paper indicated.

That mismatch gives manufacturers a direct reason to raise foreign prices, delay drug launches abroad, or convert existing discounts into confidential rebates, the paper concluded.

Economic research in European markets already shows that international reference pricing tends to cause price convergence, with reference country prices rising rather than the adopting country capturing the full discount, as FinanceTracked reported in its analysis of the Lancet study.

Professor Thomas Hwang, study lead author and a clinical fellow in surgery at Brigham and Women’s Hospital, said in comments accompanying the study that many foreign governments lack the fiscal capacity for higher drug spending.

Referenced countries, from Germany to Japan to Australia, are facing substantial pressure from the US administration and industry to raise prices and spending on medicines

Kerstin Vokinger, Professor of Law and Medicine at the University of Zurich and a co-author of the study, noted that US pricing changes could affect drug availability globally and require close monitoring by policymakers.

Confidential side deals could erode most MFN savings

Seventeen manufacturers reached undisclosed agreements with the administration that reportedly exempt them from GLOBE and GUARD pricing rules, according to the Lancet study.

Those 17 companies account for 131 of the medicines analyzed, or 67% of the drugs in the research sample, the paper detailed.

Excluding those exempted drugs shrinks potential Medicare savings by 71%, leaving just $3.3 billion of the initial projected total, the researchers calculated.

In a post-publication update accompanying the paper, Hwang said that including deals announced on August 31, 2026, raises the exempted-company count to 26 and pushes projected lost Medicare savings to nearly 80%.

The exemption pattern suggests the pricing framework’s effective reach could depend on how many manufacturers stay outside the rules through similar side deals.

Because those side deals remain non-public, policymakers and the public lack clear visibility into how much of the MFN promise is being delivered.

Study co-author Aaron Kesselheim, Professor of Medicine at Harvard Medical School, added that the pricing models have limited scope and are expected to face legal challenges before delivering their headline savings.

What Medicare enrollees should watch as MFN faces challenges

For enrollees hoping for lower pharmacy costs, the promised discounts still hinge on how the pricing rules survive expected legal fights and undisclosed exemptions.

Hwang and colleagues concluded that confidential exemptions and pending litigation could reduce the delivered savings well below the headline projections in the study.

Whether patients see lower prices at the pharmacy depends on how the courts rule and on how many drugmakers remain covered by GLOBE and GUARD.

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This story was originally published September 20, 2026 at 8:03 AM.