Global Pricing Ripple Effects of the U.S. MFN Policy

As the United States progresses with their MFN (Most Favored Nation) policy, healthcare companies are preparing to bear the brunt of the financial impact – wondering to what extent this will affect them. More broadly, the global health community is wondering: What will the effect of such policy be on medicine access and health equity, especially in low- and middle-income countries (LMICs) which rely on lower drug prices?

What is MFN?

In 2023, the US spent 17.6% of its GDP on healthcare – double the amount of any other country. The MFN policy aims to close this gap between the US and the rest of the world, by referencing the prices of the other high-income countries, thus lowering healthcare spending.

At its core, the MFN policy allows Medicare to benchmark the prices it pays for certain drugs against the lowest prices paid in a group of comparator countries. Typically, these are nations with well-established public health systems and stronger price negotiation powers.

The rationale is clear: if the U.S. pays significantly more for the same drugs than countries like Germany, France, or Australia, aligning prices should benefit American taxpayers and patients alike.

What is at stake?  

If pharmaceutical manufacturers see shrinking margins in their largest and most profitable market, they may look to recalibrate global pricing strategies to protect revenues and investments. This could involve raising prices in traditionally lower-cost countries that have benefited from differential pricing models or delaying or deprioritizing launches in emerging markets to preserve reference pricing in higher-value countries.

For LMICs, particularly in Southeast Asia, Sub-Saharan Africa, and Latin America, the concern is that they will bear the cost of this rebalancing. Ironically, the very countries whose prices may have informed the MFN benchmarking could now face repercussions from being “too affordable.” In short, equity in access could suffer, widening the health gap between high-income countries and the rest of the world. This will exacerbate the effect of the global healthcare funding gap that has already been created by the US this year.

What can Pharma do?  

The pharmaceutical industry will need to navigate this new pricing paradigm carefully, balancing commercial sustainability with access obligations. Possible approaches include:

• Outcome-based pricing and innovative contracting that decouples value from country income levels.

• Greater use of confidential discounts and managed entry agreements.

• Enhanced focus on access equity frameworks, especially for essential medicines in LMICs.

Additionally, as companies might start to reconsider their global launch sequencing, there’s a growing need to decouple commercial launch priorities from price referencing exposure—a shift that may finally push the industry toward more flexible, region-specific pricing strategies.

US legal considerations

One of the major concerns with the MFN proposal is that implementation may incentivize manufacturers to move their research and development out of the US or invest fewer resources into R&D. This is particularly true for rare diseases or cell and gene therapies, where development is very expensive.

As of today, the very same US infrastructure and legal framework, does not allow price caps, and does not have an HTA, contrary to many other countries.

The deadline for pricing discussions between pharmaceutical companies and HHS was set at June 11, 2025, however Adam Colborn, Associate Vice President of Congressional Affairs for the Academy of Managed Care Pharmacy (AMCP), “The uncertainty around legal authority may mean that no deals were struck (Ed. by June 11), despite the stated deadline”.

As now, the MNF policy has some practical barriers to overcome, and might also remain only a very strong political statement rather than an actual actionable policy.

‍