In an effort to combat the high prices for prescription drugs in the U.S., the Trump administration introduced a Most Favored Nation (MFN) drug pricing model. The model proposes aligning U.S. drug prices with the lowest price paid by a selected group of economic peer countries (part of OECD and have at least 60% of the U.S. per capita GDP) for the same product and dose. This shift would significantly reshape pharmaceutical pricing, as until now the U.S. allowed manufacturers to freely set prices, with negotiations primarily occurring with private insurers, and pharmacy benefit managers.
A Timeline of MFN Policy Developments
The MFN model was formally announced on May 12, when President Trump signed an Executive Order on broad drug pricing reforms. Following this, the administration published the initial price targets to benchmark U.S. prices against those of peer countries. Shortly afterward, the White House sent letters to 17 pharmaceutical manufacturers, requesting their commitment to comply with the MFN framework.
Since then, the industry response has been swift, marked by on the one hand intense negotiations to strike a deal to avoid further enforcement and on the other hand legal challenges, lobbying efforts, and legislative scrutiny. Even as these dynamics unfold, the administration continues to push forward with implementation, making 2025 the year when MFN pricing could shift from policy proposal to operational reality.
How Is the Industry Preparing?
Some pharmaceutical companies are already responding to the anticipated impact of MFN-style pricing by adjusting their global pricing strategies. A notable example is Eli Lilly, which has proactively moved to align prices across developed markets. On August 14th, the company announced efforts to adjust European pricing by September 1st, with Mounjaro as a key case.
According to various news reports, Lilly reached an agreement with the UK government to raise the drug’s list price, reportedly by about 170%. In Germany, Mounjaro became the first drug to secure a confidential rebate deal under the AMNOG framework. These actions signal a broader industry trend: narrowing the gap between U.S. and international list prices to mitigate MFN-driven pricing pressure.
Latest Development: Tariff measures separate from the MFN model
On August 21st, a new trade-related measure was announced, representing a distinct mechanism affecting drug costs. The joint statement defining the new parameters for the EU-US trade relationship introduced a significant update to the drug pricing landscape. A 15% import tariff on pharmaceuticals will be imposed on medicines imported from EU to the US, though generic drugs have been exempted from this policy.
This development adds a new layer of complexity for manufacturers already navigating potential MFN exposure. While originator brands may face higher import-related costs, the generic exemption offers some relief and highlights the administration’s attempt to protect affordable drug access while pressuring brand manufacturers to address international price disparities.
Stay Informed with Justin Stindt Consultants
At Justin Stindt Consultants, we are actively monitoring U.S. policy developments, including the MFN rule, to provide our pharma, biotech, and medtech clients with real-time insights and guidance.
Why Partner with Us?
Justin Stindt Consultants is a specialized market access consulting firm offering bespoke market access services. Our team of experts has extensive experience in the US Market Access, ensuring that our clients are well-prepared for seamless application submissions. Our agency has been the preferred service provider for many pharmaceutical and biotechnology companies seeking assistance.
- Proven Expertise: With years of experience in global pricing and reimbursement, our team offers unparalleled expertise and strategic insights.
- Tailored Strategies: We understand that each client and market is unique, and we provide customized solutions that address specific needs and challenges.
- Comprehensive Support: From early strategy advice through launch and beyond, we offer end-to-end support to ensure your success.
- Regulatory Mastery: Our team has deep knowledge of FDA processes and U.S. payer dynamics, enabling faster, more confident market access.
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Ready to strengthen your U.S. market access strategy in light of the Most Favored Nation policy?
Contact Justin Stindt Consultants today to leverage our expertise and navigate this evolving landscape with confidence.
