US President Donald Trump has urged pharma CEOs to implement most-favored-nation pricing for Medicaid by the end of September, following the announcement of 15% tariffs on EU imports. The administration aims to force prices down to levels seen in other developed markets. Biopharmas are making US manufacturing investments to appease Trump and mitigate tariff impacts.

Despite pressure from the Trump administration, Morningstar Equity Research is not changing its biopharma fair value estimates. Firms are adjusting inventory and production rates to defend near-term profits against tariffs. The potential long-term outcome includes a high-teens tax rate. A broader Medicaid program with MFN pricing is deemed unrealistic without Congress involvement.

Bulls suggest an alternative to MFN pricing that focuses on cutting drug spending without reducing innovator prices. This strategy aims to bypass pharmaceutical benefit managers with direct-to-consumer initiatives. Morningstar’s editorial policies ensure transparency and impartial analysis.

Read more at Morningstar: Tariffs Increasingly Manageable; Medicaid Pricing Policy Looks Unrealistic