Most-Favored-Nation Pricing Returns—And So Do the Risks to Innovation, Investment, and Patient Access

The White House has once again turned to heavy-handed price controls in its latest bid to lower drug costs—reviving the controversial Most-Favored-Nation (MFN) pricing model that would tie U.S. Medicare payments to the lowest prices paid in foreign countries.

At first glance, the proposal promises savings by forcing drugmakers to match the lowest prices from countries with nationalized healthcare systems. But beneath the political soundbites lies a policy that undermines America’s globally unmatched pharmaceutical sector—and threatens long-term harm to patients, innovators, and investors alike.

The executive order directs the Department of Health and Human Services to set “target prices” based on international benchmarks and gives drug companies just 30 days to fall in line—or face regulatory and financial penalties. It’s an approach more familiar to Brussels than Washington: punish success, ignore market dynamics, and let bureaucrats determine value.

Supporters claim the U.S. overpays for medicine and that aligning prices with nations like Canada, Germany, or the U.K. would bring “fairness.” But those countries don’t lead the world in drug development—America does. And there’s a reason for that: the promise of market-driven returns fuels the massive R&D investments needed to bring new treatments to life.

MFN doesn’t fix a broken system—it imports broken policies from abroad. By anchoring U.S. prices to government-run health systems that routinely delay or deny access to cutting-edge therapies, the policy could restrict patient access here at home. Rare disease treatments, oncology breakthroughs, and precision medicine innovations are often the first to be rationed under state-controlled pricing.

Economists and industry leaders warn that the policy will have ripple effects well beyond Medicare. If drugmakers are forced to accept foreign-controlled prices in the U.S.—the largest and most dynamic pharmaceutical market in the world—they will have less incentive to invest, less capital to deploy, and fewer new therapies to bring forward. Investors are already signaling concern.

This isn’t the first time MFN has been floated. A similar model proposed in 2020 was struck down by the courts for cutting corners in the regulatory process. But the fundamental flaws remain: it’s a backdoor price control wrapped in populist language. What’s worse, it rewards the bad behavior of foreign governments that deliberately underpay for innovation—knowing American patients will pick up the tab.

Rather than unleashing more regulation, policymakers should focus on market-based reforms that improve competition, increase transparency, and empower patients to make informed decisions. Real reform doesn’t come from copying socialist health systems—it comes from strengthening the free-market principles that made America a global leader in life sciences.

With innovation on the line, the MFN model isn’t just bad economics. It’s a dangerous precedent—and one the U.S. can’t afford to get wrong.