MFN Pricing and the “Global Launch Freeze”: A More Measured Perspective
The argument is intuitive. If U.S. prices are increasingly benchmarked against international prices, pharmaceutical companies will be reluctant to launch early in lower-priced markets. Doing so, it is argued, could anchor U.S. prices downward. The result, according to this view, is a strategic pullback from ex-U.S. markets and slower global access to new therapies.
This is a serious concern and deserves careful consideration. However, the reality is likely to be more nuanced than many commentators suggest. Global drug pricing systems are structurally complex, institutionally embedded, and politically constrained. A wholesale “global launch freeze” is far from inevitable.
The Emerging U.S. MFN Framework
The current U.S. administration has introduced or proposed several initiatives that incorporate international price benchmarking:
- GLOBE: a proposed Medicare Part B model using international benchmarks to inform payment adjustments for physician-administered drugs. Expected launch date October 2026. [1]
- GUARD: a Medicare Part D model introducing international reference pricing into rebate calculations for selected outpatient medicines. Expected launch date January 2027 [2]
- GENEROUS: a voluntary Medicaid model aligning net prices more closely with international levels via supplemental rebate mechanisms. The model has now launched. [3]
- Trump Rx: a federal platform aimed primarily at uninsured individuals, where a limited set of branded drugs are listed at prices that in some cases approximate international levels. Currently operational, with the number of drugs listed expected to increase. [4]
International referencing is therefore no longer theoretical. It is embedded in live or proposed policy mechanisms. This has understandably prompted concern within industry circles that ex-U.S. launches could negatively affect U.S. pricing benchmarks.
The Core Industry Concern
The central argument put forward by some industry observers is straightforward:
- U.S. pricing mechanisms increasingly reference international prices
- Many ex-U.S. markets accept lower prices than the U.S.
- Early launch in lower-priced countries could reduce U.S. net pricing
- Therefore, companies will delay or restrict launches outside the U.S. to protect their primary revenue base
On the surface, this is economically rational behaviour. Yet it rests on assumptions about global pricing dynamics that may not fully reflect current realities.
Why a Broad Global Retrenchment Is Unlikely
1. U.S. Price Compression Is a Structural Objective
Lowering drug prices has become a durable U.S. policy priority. Whether achieved through international referencing, direct negotiation, direct to consumer mechanisms, PBM policy, inflation rebates; downward pressure on U.S. net prices is unlikely to dissipate. International benchmarking is now part of the policy landscape. Even absent MFN models, other mechanisms would likely continue to exert price pressure. Waiting for policy reversal is unlikely to be a viable long-term strategy.
2. Most Countries Do Not Price Reference the U.S.
Outside the United States, drug pricing is typically determined through domestic health technology assessment (HTA) frameworks and centralised negotiation systems. These systems are built around domestic value assessments, budget impact considerations, and statutory processes. They are not designed to adjust dynamically in response to U.S. pricing policy.
To date, there has been limited evidence of systemic upward price adjustments outside the U.S. in response to MFN discussions, with the only exception being a modest adjustment in the UK. Structural HTA thresholds and negotiation frameworks are unlikely to change rapidly.
3. Raising Prices Outside the U.S. Carries Political and Fiscal Costs
For ex-U.S. governments to materially increase drug prices would require additional public spending and political justification. Public healthcare budgets are finite. Raising prices to accommodate U.S. benchmarking policies would require governments to explain higher expenditures to taxpayers, often in systems already facing fiscal constraints. Asking voters to accept price increases risks provoking the negative reaction that drug pricing already elicits in the US electorate. Absent a compelling domestic rationale, such upward adjustments appear unlikely in the near term.
4. No Agreed Global Benchmark for “Fair” Returns
Much of the MFN debate implicitly assumes there is a clear, internationally accepted benchmark for what constitutes an appropriate global price to sustain pharmaceutical R&D. In reality, no such consensus exists. Countries make pricing decisions based on domestic willingness-to-pay thresholds, healthcare priorities, and budget impact constraints. Expecting coordinated upward harmonization of global prices presumes a degree of international alignment that does not currently exist.
5. The Global Pharmaceutical Landscape Is Diversifying
The industry is no longer as U.S.-centric as it was two decades ago, with and now shows substantial global diversification across Europe and Asia. China has emerged as a major pharmaceutical market with growing domestic innovation capabilities. European biotech ecosystems continue to strengthen. Regional manufacturers are increasingly competitive in oncology, immunology, and specialty therapeutics. If multinational companies were to systematically delay launches in key markets, they would create space for regional competitors. Markets rarely remain unserved for long. Competitive dynamics limit the feasibility of prolonged withdrawal.
6. Patent and Exclusivity Timelines Apply Globally
Patent life and regulatory exclusivity periods are finite. Delaying launch in major markets reduces cumulative lifetime revenue and may weaken competitive positioning, particularly in therapeutic areas with multiple entrants. Early engagement can support guideline inclusion, physician adoption, and real-world evidence generation. These strategic considerations extend beyond headline price levels.
7. Geopolitical and Strategic Diversification
Recent geopolitical developments have encouraged many countries to reconsider supply chain resilience and strategic autonomy in healthcare. Diversifying partnerships and strengthening regional pharmaceutical sectors are likely to become a growing priority over aligning pricing policy with U.S. objectives.
In this context, significant upward price adjustments appear unlikely to be a primary policy goal outside the United States.
What Is More Likely to Occur?
Rather than a widespread launch freeze, a more plausible scenario involves strategic recalibration.
First, U.S. net prices are likely to experience gradual compression over time. International referencing adds to existing mechanisms that already exert downward pressure.
Second, companies may place greater emphasis on maintaining confidentiality around net discounts and managed entry agreements, even as U.S. authorities seek increased transparency.
Third, global launch strategies may become more selective. Highly innovative therapies with strong clinical differentiation and compelling HTA value propositions are likely to remain priorities for ex-U.S. launches. In contrast, products with more limited incremental benefit may see more targeted geographic rollouts.
Fourth, non-U.S. companies may expand their presence in markets where competitive gaps emerge.
Price will remain an important factor influencing launch sequencing, but it will not be the sole determinant.
A Rebalancing Rather Than a Retreat
MFN-related policies undeniably alter the global pricing conversation. They introduce new considerations into launch planning and portfolio management. However, the prediction of a systemic withdrawal from ex-U.S. markets underestimates the institutional rigidity of international pricing systems, the competitive realities of global pharma, and the structural pressures shaping both U.S. and non-U.S. markets.
The most probable outcome is gradual rebalancing. U.S. net prices may moderate. Companies may refine launch sequencing and evidence strategies. Some selective delays may occur. But the broader global innovation ecosystem is unlikely to contract dramatically. A measured view suggests adjustment, not catastrophe, and strategic adaptation rather than wholesale retreat.
Sources
- GLOBE (Global Benchmark for Efficient Drug Pricing) Model, Dec 25, CMS
- GUARD (Guarding U.S. Medicare Against Rising Drug Costs) Model, Dec 25, CMS
- GENEROUS (GENErating cost Reductions fOr U.S. Medicaid) Model, Dec 25, CMS
- Trump Rx https://trumprx.gov
- Most Favoured Nation Pricing: Policy Shift or Pressure Tactic? Niven, Biopharma Over Coffee Blog, May 25
