5 Key Takeaways on Most Favored Nations Pricing From MJH Life Sciences Webinar

Most Favored Nation (MFN) pricing represents a major shift in U.S. drug policy. While intended to make medications more affordable, experts during an MFN 2025 webinar warned it could slow innovation, especially in oncology, and disrupt the balance of the healthcare system. Legal challenges, interactions with the IRA and 340B programs and how insurance covers medications will shape its impact on patients, payers and drug companies.

The MFN 2025 webinar hosted by MJH Life Sciences on October 8 brought together experts in health policy, economics and law to discuss how adopting international drug prices could reshape U.S. drug costs, innovation and patient access.

The session was moderated by Ronald W. Lanton III, Esq., a partner at Lanton Law and included speakers Peter Rubin, executive director of No Patient Left Behind, Steve Forster, J.D., partner at Jones Day’s Health Care & Life Sciences Practice and Melanie Whittington, Ph.D., managing director and head of the Center of Pharmacoeconomics at MEDACorp.

As the second webinar of the MJH MFN series, the discussion highlighted both the urgency and complexity of aligning U.S. drug prices with those abroad. The May 12, 2025, executive order made by President Donald Trump states its mission is to create access for Americans to the lowest prices from other nations.

The first webinar in September looked at how MFN could affect drug launches, direct-to-consumer sales, research and development choices and overall access to medications.

Below are the five key takeaways from the recent webinar that highlight potential impacts of MFN pricing and what healthcare stakeholders should watch for:

1. Legal Authority Remains Unclear

MFN pricing is proceeding without “explicit statutory authority.” Forster, an expert on healthcare law, explained, “There is no specific legal authority (saying) you must lower your prices or must make your prices consistent with international reference pricing. There’s no statute or regulation or even a guidance for that matter, that would say ‘manufacturers you must do this and you must implement it.’”

Forster, J.D.

Previous MFN attempts, such as the 2020 Part B-only rule, were blocked on procedural grounds. The new executive order extends MFN pricing across multiple drug categories, and the administration may use tools such as tariffs to achieve its goals, according to Forster.

“It appears to me, as my opinion alone, is that the use of tariffs is a more immediate and more efficient model to apply pressure to seek the result that they’re seeking,” he said.

Legal challenges are expected as experts anticipate drug manufacturers, trade groups and other stakeholders could argue that the government is overstepping its power, breaking the law or violating property rights.

Forster suggested that anyone who is potentially impacted by the MFN pricing model “will be well-advised to scrutinize your financial modeling, what that would look like, to go through your contracts and be aware of what you may have to do and undertake if implemented, and to look at your compliance programs and how you're going to assess this over the course of time.”

2. Innovation Risks, Especially in Oncology

Panelists raised concerns about MFN's effect on innovation, especially when combined with the Inflation Reduction Act’s (IRA) “pill penalty.” This “penalty” refers to small-molecule drugs having a shorter wait period before Medicare can negotiate their process compared to biologic drugs.

Rubin explained that trying to enforce foreign price controls along with the IRA makes it harder to launch small molecule drugs in the United States.

He added that layering MFN pricing on top of the IRA could reduce clinical trials for promising oncology treatments. Small-molecule drugs could become less attractive investments as well, even though biologics are more difficult to develop and often require physician administration.

Rubin

“They’re usually more expensive to manufacture,” he explained. “They are harder to genericize. They’re not interchangeable at the pharmacy.”

3. U.S. Market Advantages vs. Foreign Price Controls

The experts highlighted the differences between U.S. drug markets and those internationally, noting that Americans place greater value on freedom of choice, competition among health plans and the doctor-patient relationship.

Rubin echoed this by stating that importing foreign price controls could reduce access and competitiveness in U.S. biopharma. “From our perspective, we should not adopt the price controls from these foreign countries, because they result in access restrictions and declining biopharma innovator competitiveness that the U.S. has yet to see,” he said.

It’s important to note that the U.S. drug market still rewards innovation while keeping drugs relatively affordable, with prices reflecting about a 70% discount off the broader “patient societal value,” meaning the market is estimating what a drug is worth, according to Rubin.

4. Impact on Insurance and Patient Access

Rubin addressed that MFN pricing might not lower out-of-pocket costs for patients if health plans don’t change their coverage. He added that what matters is whether health plans use the premiums people pay to fully cover prescribed treatments with low or no copay. He added that focusing only on cash prices misses the point and that cutting a drug’s price from $5,000 to $2,500 a year may not help most Americans who still face high out-of-pocket costs.

Whittington pointed out that when generics enter the U.S. market, they drive down costs. However, overly low branded drug prices could stop companies from making new generics or biosmilars in the future.

Whittington, Ph.D.

“It’s hugely important for us to consider that the end game for biopharmaceutical innovation is not when it gets FDA approval and entered the market; it’s when it eventually loses its patent and competition, (the) generic/biosimilar competition could come in and drive the price down,” Whittington said. “That's the end game. So we want to make sure we preserve that."

5. Uncertainty and Strategic Planning

The MFN plan raises questions about which types of drugs and areas of research will get the most attention, especially with uncertain international pricing.

Forster stressed the need to review financial plans, contracts and compliance programs so organizations are ready if MFN is put into effect. Rubin added that healthcare works as a single system rather than a competition between providers, payers and innovators.

“We’re all in this together, and it’s really important that we don't dismantle any part of that ecosystem for short-term games,” Forster said. “The best way to preserve it is by fixing insurance and not picking winners and losers.”