Most-Favored-Nation Drug Pricing: Policy Shift or Pressure Tactic?
Another week, another Executive Order directed at the pharmaceutical industry. The Most-Favored-Nation Drug Pricing Executive Order (EO) published 12th May, aims to significantly reduce the price of US drugs through international reference pricing. The call to action is the claim that ex-US countries are ‘free riding’ off the high prices that Americans pay for these drugs, the profits from which ultimately support R&D. The solution? Set US prices at the lowest level from amongst a basket of countries with similar GDP per capita. [1] Ordinarily an announcement of this kind would have sent pharma share prices crashing. Surprisingly they remained largely unchanged, indicating that at least in the eyes of investors this EO won’t have much impact at all. What should we make of all of this? Can the EO really be enacted? Are investors overconfident and downplaying the risks? We will explore these questions and aim to see where this is heading. We will also reflect on the diffic...
