{"id":17213,"date":"2026-05-04T15:32:54","date_gmt":"2026-05-04T15:32:54","guid":{"rendered":"https:\/\/blogs.uakron.edu\/ualawip\/?p=17213"},"modified":"2026-05-04T15:37:11","modified_gmt":"2026-05-04T15:37:11","slug":"most-favored-nation-mfn-drug-pricing-you-cant-import-european-prices-without-importing-european-tradeoffs","status":"publish","type":"post","link":"https:\/\/blogs.uakron.edu\/ualawip\/2026\/05\/04\/most-favored-nation-mfn-drug-pricing-you-cant-import-european-prices-without-importing-european-tradeoffs\/","title":{"rendered":"Most-Favored-Nation (MFN) Drug Pricing: You Can\u2019t Import European Prices Without Importing European Tradeoffs"},"content":{"rendered":"\n

By Dr. Gabriela Lenarczyk<\/em><\/p>\n\n\n\n

Dr. Lenarczyk is a 2024-2025 Edison Fellow. This blog post is in partial \u00a0fulfillment of obligations for the\u00a0Thomas Edison Innovation Law and Policy Fellowship<\/a><\/em>.<\/p>\n\n\n\n

Recently resurfaced in U.S. politics, most-favored-nation (MFN) drug pricing is irresistible in its simplicity: If other wealthy countries pay less for the same medicines, why shouldn\u2019t Medicare get those prices, too? High healthcare costs impose a considerable financial strain on patients and public programs. But MFN\u2019s simplicity is also its trap. It treats Europe as a price list rather than as a set of legal, fiscal, and institutional choices.<\/p>\n\n\n\n

In May 2025, President Donald Trump issued an executive order<\/a> directing agencies to pursue MFN-style prescription drug pricing. The order instructed HHS to communicate MFN price targets to manufacturers and framed the policy as a response to foreign \u201cfree riding\u201d on American pharmaceutical innovation. HHS later announced<\/a> that manufacturers would be expected to align U.S. pricing for brand products without generic or biosimilar competition with the lowest price in an OECD country whose GDP per capita is at least 60% of the U.S. level.<\/p>\n\n\n\n

By December 2025, CMS proposed two mandatory demonstration models that operationalize international price information through rebate and out-of-pocket mechanics. The GLOBE<\/a> model for Medicare Part B would modify the Part B inflation-rebate calculation by using international pricing information to set a benchmark for certain high-spend, single-source drugs and biologics. The GUARD<\/a> model for Medicare Part D would assess manufacturer rebates when selected Part D drugs exceed an international benchmark derived from economically comparable countries.<\/p>\n\n\n\n

MFN certainly has a real empirical hook. If the benchmark is credible and the policy is enforceable, it could pull down some U.S. prices, especially for high-spend products that face little competitive discipline. The harder question is what happens when U.S. payment is tied to prices set elsewhere.<\/p>\n\n\n\n

Once foreign prices become a U.S. payment ceiling, they stop being a passive comparison and become an input into American reimbursement. That linkage exports incentives. Manufacturers and foreign payers have reasons to change what they do: to delay launches in lower-price markets, to shift concessions into confidential arrangements, and to keep \u201creferenceable\u201d prices high even when net prices are lower. Europe\u2019s experience with external reference pricing offers the closest warning.<\/p>\n\n\n\n

Europe\u2019s reference-pricing analogue<\/strong><\/h2>\n\n\n\n

Europe does not have one pharmaceutical pricing system. EU law provides a common regulatory route for many medicines, but pricing and reimbursement remain largely national. Member States use combinations of health technology assessment, budget-impact review, coverage negotiation, external reference pricing, tendering, confidential rebates, managed entry agreements, and supply obligations.<\/p>\n\n\n\n

External reference pricing<\/a> (ERP), where countries benchmark prices to each other, woven into many European pricing systems, is the closest European analogue to MFN. It shows what happens when visible prices in one market affect prices elsewhere. A low observable price in one country can reverberate into another\u2019s negotiations. That interdependence predictably encourages strategic launch sequencing: Launch first where prices are higher, delay or avoid where low prices would \u201ccontaminate\u201d the reference network. Recent empirical work<\/a> by Maini and Pammolli uses a structural model of European launches and estimates that ERP increases entry delays in eight lower-income European countries by up to one year per drug, and that eliminating those ERP-driven delays could be achieved via lump-sum transfers to manufacturers on the order of \u20ac18 million per drug. A systematic review<\/a> similarly concludes that ERP can restrain prices but may undermine availability and contribute to launch delays or withdrawals, depending on design features and the surrounding reimbursement context. Other empirical work<\/a> also finds ERP associated with a substantially reduced likelihood of launch within a short window after regulatory approval.<\/p>\n\n\n\n

Europe\u2019s access debates are therefore not reducible to \u201cEurope pays less.\u201d They are about which trade-offs European systems are willing to tolerate: lower prices, yes, but also later or more uneven access across member states and increased reliance on confidential discounts and managed entry arrangements. ERP is not the only driver of access delays, which also reflect broader features of national HTA, reimbursement, negotiation, and market-access systems. Those factors lie beyond the scope of this post, but they matter to the central point: Referenceable prices can reshape launch incentives. In this layered system, public payers often have stronger bargaining positions than fragmented U.S. payers, but patients may experience longer waits or uneven availability across countries.<\/p>\n\n\n\n

Industry\u2011sponsored data should be interpreted cautiously, but it does shape the European debate and gives a sense of scale. EFPIA\u2019s 2024 Patients W.A.I.T. Indicator<\/a>, tracking centrally authorized medicines from 2020\u20132023, reports that across the EU27 the average time from marketing authorization to \u201cavailability\u201d is 578 days, with only about 46% of medicines actually available under their definitions. For orphan medicines, the picture is worse: 611 days and 42% availability. Whatever one thinks of the framing, it highlights a basic gap: Regulatory approval and reimbursed access are different events, and pricing and reimbursement negotiations explain much of the distance between them.<\/p>\n\n\n\n

Rare disease therapies are the stress test. They are expensive, low\u2011volume, and politically salient. They are also exactly where launch sequencing and confidential deals are most tempting for manufacturers trying to protect higher prices in larger markets. MFN\u2019s effects would most likely<\/a> concentrate in a small number of high\u2011priced orphan and oncology products, where U.S. revenue is often disproportionately important to manufacturers\u2019 expected returns.<\/p>\n\n\n\n

Recent reporting makes the concern less abstract. Reuters reported in March 2026<\/a> that drugmakers had begun delaying some European launches amid uncertainty over U.S. MFN policy, with a GlobalData analysis<\/a> showing a roughly 35 percent fall in European new drug launches in the ten months after the U.S. executive order compared with the preceding ten months. That report is not definitive causal proof, and it should not be treated as such. But it is precisely the kind of early signal one would expect if manufacturers feared that low European prices could be used to lower U.S. prices.<\/p>\n\n\n\n

Europe itself is not treating its pharmaceutical framework as a solved problem. Recent EU reforms<\/a> are aimed at recalibrating affordability, innovation incentives, timely access, and supply security inside an institutional system that already uses price discipline. The U.S. should notice that Europe\u2019s lower prices do not float free of these surrounding mechanisms.<\/p>\n\n\n\n

What this implies for U.S. MFN proposals<\/strong><\/h2>\n\n\n\n

First, MFN is not just a domestic lever; it exports incentives into other systems. If U.S. payment is capped at \u201cthe lowest price in a set of peers,\u201d then every small or lower-price market becomes a potential constraint on global revenue. Foreseeable responses include delayed launches in lower-price markets, higher list prices paired with confidential rebates, narrower access agreements, or, in extreme cases, withdrawal threats.<\/p>\n\n\n\n

Second, MFN works only as well as the prices it references. It assumes that the referenced price is knowable and meaningful. However, European systems often distinguish between official list prices and confidential net prices. Public prices may remain relatively high because they are visible to other countries\u2019 reference-pricing systems, while the real economic concession happens through rebates, discounts, or managed entry agreements. A survey of European countries through EURIPID<\/a> found widespread use of confidential agreements between public payers and companies, with actual prices typically lower than published list prices. If the U.S. benchmarks to published prices, it may copy numbers that do not represent what European payers actually pay. If it tries to benchmark confidential net prices, it collides with verification problems, contractual secrecy, and administrative capacity.<\/a><\/p>\n\n\n\n

Third, MFN collides with legal authority and monopoly structure. The 2020 MFN model<\/a> was enjoined and then withdrawn, and Congressional Research Service notes<\/a> that renewed efforts need a clear statutory hook, especially if policymakers aim to reach beyond federal programs into the private market. Europe is instructive here: It largely preserves strong IP protection but disciplines prices through coverage decisions, HTA, reimbursement negotiation, and supply-management tools\u2014institutions MFN does not replicate.<\/p>\n\n\n\n

Conclusion<\/strong><\/h2>\n\n\n\n

The point is not that the United States must accept its drug-price exceptionalism, or that European systems are too fragile to be referenced. International benchmarking can be a legitimate tool, but a benchmark is not neutral once a market as large as the United States adopts it. Borrowing Europe\u2019s observable prices risks borrowing some of the trade-offs embedded in European pricing systems. This post has focused on MFN\u2019s potential effects on launch timing, availability, and pricing behaviour; the separate question of how MFN might affect long-run incentives to invest in new drug development also belongs in the broader drug-pricing debate.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Dr. Gabriela Lenarczyk Dr. Lenarczyk is a 2024-2025 Edison Fellow. This blog post is in partial \u00a0fulfillment of obligations for the\u00a0Thomas Edison Innovation Law and Policy Fellowship. Recently resurfaced in U.S. politics, most-favored-nation (MFN) drug pricing is irresistible in its simplicity: If other wealthy countries pay less for the same medicines, why shouldn\u2019t Medicare […]<\/p>\n","protected":false},"author":4851,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[20,26,35,40,41],"tags":[],"class_list":["post-17213","post","type-post","status-publish","format-standard","hentry","category-healthcare","category-innovation-2","category-patent-law","category-patents","category-pharma"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts\/17213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/users\/4851"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/comments?post=17213"}],"version-history":[{"count":4,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts\/17213\/revisions"}],"predecessor-version":[{"id":17220,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/posts\/17213\/revisions\/17220"}],"wp:attachment":[{"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/media?parent=17213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/categories?post=17213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.uakron.edu\/ualawip\/wp-json\/wp\/v2\/tags?post=17213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}