The Alliance for U.S. Startups and Inventors for Jobs (USIJ) has released a new white paper analyzing the opposition to the Most-Favored-Nation (MFN) prescription drug pricing model proposed in a recent executive order. The policy would peg U.S. drug prices to the lowest prices paid by foreign governments — a move the Administration argues is intended to address foreign underpayment for American innovation.
USIJ’s paper reviews dozens of public comments submitted in response to the U.S. Trade Representative’s request for input on how foreign governments underprice American-developed medicines. These submissions, from patient advocates, taxpayer groups, economists, and pro-innovation organizations, reveal deep concerns about the MFN model’s consequences for U.S. innovation, access to medicines, and long-term global competitiveness.
Key concerns raised include:
Threats to Innovation: Commenters warned that importing foreign price controls would sharply reduce private-sector investment in research and development, particularly from small biotech companies that drive much of the early-stage innovation in the U.S.
Patient Access and Delays: The MFN approach could lead to significant delays in access to new therapies, with seniors and patients with rare diseases hit hardest. Countries with similar price control regimes often wait years for access to new treatments.
Weakened Trade Leverage: Tying U.S. drug prices to foreign benchmarks would reward countries that suppress prices and erode the U.S. government’s negotiating power in trade and intellectual property disputes.
Failure to Fix Foreign Freeloading: The MFN model was widely seen as capitulating to — rather than correcting — foreign underpayment, while doing little to ensure that other nations contribute their fair share toward the cost of pharmaceutical innovation.
Proposed Alternatives: Commenters offered constructive alternatives to MFN, including using trade agreements to push for fairer cost-sharing, linking spending targets to GDP, and promoting domestic reforms that preserve U.S. innovation leadership.