Health Innovation Leaders Respond to the Executive Order on Most Favored Nations Pricing

On May 12, 2025, President Donald J. Trump signed Executive Order  DELIVERING MOST-FAVORED-NATION PRESCRIPTION DRUG
PRICING TO AMERICAN PATIENTS that establishes a requirement for Most Favored Nations Prescription Drug Pricing.

Section 5 of the EO states:  “Within 30 days of the date of this order, the Secretary shall, in coordination with the Assistant to the President for Domestic Policy, the Administrator for the Centers for Medicare and Medicaid Services, and other relevant executive department and agency (agency) officials, communicate most-favored-nation price targets to pharmaceutical manufacturers to bring prices for American patients in line with comparably developed nations.” 

The intent is to obtain the lowest prices offered by drug companies in other wealthy countries, known as “most-favored-nation” (MFN) pricing, and to take action if those prices aren’t extended to Americans. It also calls for direct-to-consumer programs, drug importation from countries with lower costs, and antitrust enforcement against companies that block price competition.

 

 YouTube Caption: “The United States will no longer subsidize the health care of foreign countries and will no longer tolerate profiteering and price gouging. For the first time in many years, we’ll slash the cost of prescription drugs, and we will bring fairness to America. Drug prices will come down. We’re gonna cut out the middlemen and facilitate the direct sale of drugs at the most favored nation price directly to the American citizen.” –President Donald J. Trump

AZBio’s Position on Most Favored Nations Pricing

The Arizona Bioindustry Association (AZBio) is the leading advocate for Arizona’s life science and healthcare innovation ecosystem. As a statewide nonprofit trade association, AZBio connects researchers, entrepreneurs, investors, patient groups, and industry leaders to accelerate the growth of bioscience companies and bring innovative solutions to market. From cutting-edge therapeutics and diagnostics to medical devices and digital health, AZBio champions the discoveries that improve lives while driving economic development.  AZBio Members employ over 365,000 Arizonans and help people around the world.

“Our community of health innovators works to improve health and make life better for people everywhere”, stated Joan Koerber-Walker, president & CEO of the Arizona Bioindustry Association (AZBio). “We cannot make life better if people do not have access to the health innovations we develop and deliver.  When we speak of access, it includes affordability and availability. Change that does not improve access, does not make life better for people in Arizona or across our nation. A Most Favored Nations policy in the United States, if not carefully implemented, would harm the patients we work to help and stifle the thriving health innovation ecosystem that Arizonans have spent decades building.”

Achieving the goal

As with every plan or policy, implementation is the key to success or failure. As the Administration and Congress work to implement the President’s Executive Order on MFN, the following are some important considerations for our nation’s leaders:

1. Patients are waiting for treatments and cures. The United States leads the world in access to new, innovative medicines. We owe it to the American people to ensure that this does not change. 
   

   SOURCE: US vs Nations with Controlled Prices) – see page 11

2. How can we accurately compare prices between single payor countries and the U.S. where we have a complex model that includes PBMs and a wide range of discounts applied against the wholesale price of medicines? According to data published by PhRMA, “half of every dollar spent on brand medicines goes to entities that play no role in the research, development, or manufacturing of those medicines. The image below highlights a growing problem: spending on medicines is padding the profits of middlemen and subsidizing many parts of the health care system, often at the expense of patients.”     
   

   Source: Cost and Value of Medicines https://phrma.org/policy-issues/cost-of-medicines

3. Countries can unilaterally change policy.  Corporations can not unilaterally change contracts with foreign nations. In his remarks prior to signing the EO on Most Favored Nations, President Trump emphasized that the goal is to have the U.S. pay less and for other countries to pay more thus  having foreign countries pay there fair share.  This is hard to  disagree with. But, what must be considered is the time that will be required for agreements around the world to be renegotiated so this can happen. Otherwise, the U.S. would join other nations in failing to support the cost of the research and development that results in health innovation and the innovation pipeline for treatments and cures will be negatively impacted delaying or denying access to future treatments and cures.  
    
4. What is the impact on industry R&D spend as industry profits decline? Biopharmaceutical companies are investing in R&D on an immense, global scale. A 2024 study published in Nature found that global biopharmaceutical R&D investment totaled $276 billion across 4,191 global companies in 2021. This data was based on a comprehensive view of R&D investment including investments by publicly traded and privately owned companies.  The U.S. is home to just 4% of the world’s population.  Yet, nearly half (48%) of all global biopharmaceutical companies are headquartered in the U.S.  This is a testament to our nation’s commitment to being the world leader in health innovation.   This leading position is not one we can afford to cede to other nations.  When we greatly reduce industry profits, we greatly reduce the funding available for R&D efforts and threaten our leadership position.
    
5. How will the combined cuts to NIH and industry R&D spending impact our health innovation pipeline and our standing as the leading nation for health innovation? In addition to the impact of MFN, which will reduce the availability of R&D funding within companies, the federal levels set by Congress for research funding at the NIH and other federal agencies is being significantly reduced.  These combined reductions further jeopardize our position as a global leader in health innovation going forward. 
    
6. How will reductions in price impact the ASP+6 calculation that is used in both Medicare and Medicaid? This could have serious implications in rural and safety net healthcare delivery where providers are already under cost pressure. Closures result in deceased patient access and care. In a 2024 report published by Avalere Health, Commercial Spillover Impact of Part B Negotiations on Physicians, “Physicians could lose at least $25 billion in add-on payments for 10 Part B drugs expected to be negotiated by CMS, with oncology products accounting for at least $12 billion.” This estimate by Avalere Health was  based on the limited number of drugs subject to negotiation by Medicare.  Broad reductions across all physician administered drugs could result in a catastrophic limiting of access to care for some of our nation’s sickest patients. 
    
7. How will additional decreases in price impact the production and supply of Generics? Many generic drugs already have extremely thin margins. If margins go down too far, ongoing manufacturing becomes economically challenged and could result in critical shortages as manufacturing lines shut down.  As the Administration works through its implementation plan, this is an important consideration. 
    
8. How real are the savings when adjusted for tax impact? In 2023, acccording to The U.S. Bioscience Economy: Driving Economic Growth and Opportunity in States and Regions (BIO/TEConomy 2024), bioscience companies employed 2.29 million Americans across nearly 150,000 individual business establishments with a footprint in every U.S. state. It also generated a significant tax impact as illustrated below. The bioscience industry continues to employ a highly-skilled and STEM-intensive workforce that is reflected in its high-wage jobs. In 2023 the average U.S. bioscience worker earned more than $132,000 per year, which is $60,000 or 83 percent more than the nation’s private sector average.  Reductions in revenue due to MNF revenue reductions will likely lead to reductions in the U.S. life science workforce and their federal, state, local contributions.   
      
9. How will private investors respond to these changes? According to Incubate’s recent surveys of biotech investors and CEOs, the risk of price controls in the U.S., and low reimbursement rates create a far worse outlook for a company’s ability to attract investment for clinical development programs. Moreover, biotech CEOs are concerned that investment will flow to other sectors, such as technology, where there is less risk, and that investors will go to different markets, including China. MFN would result in promising treatments being left behind in the clinic without the capital flowing into the U.S. biotech companies to conduct costly clinical trials.       
    
10.  Arizona is health innovation ecosystem is growing. From an Arizona perspective, how will these factors impact our current industry and future growth? Arizona is not home to an “old guard” life science sector like you will find in Massachusetts or California where over  58.6% of the Venture Capital was invested over the period from 2019-2023.  Arizona companies working to develop new treatments and cures face greater challenges in attracting the funding they need to succeed. As investors cut back or slow down investments, or shift assets to other sector they view a more profitable, this will make the process of bringing their products to market even more difficult. Over the last decade, Arizona was the second fastest life science job creator in the country, second only to Massachusetts.  Over $30 billion in public and private investment has fueled this growth. The economic impact of Arizona’s life science sector has risen from $23.16 billion (2016) to $32.67 billion (2018), to $38.54 billion (2021) and $43.64 billion (2023).  Arizonans are working together to grow economic impact to $77 billion by 2033.  Policies that reduce incentives for investment or are perceived as increasing investment risk, will limit our ability to achieve our goal, create high quality jobs and. most importantly, deliver the treatments and cures that people are waiting for.

Understanding the Challenge of MNF

On Feb. 19, 2025, prior to the release of the May 12th executive order on MNF, No Patient Left Behind published the video below on YouTube.  It’s caption reads:

“America is the global leader in biomedical innovation because it has a market that values new medicines. When other countries pay less, they are free-riding on our willingness to pay for new treatments. Forcing drug manufacturers to charge the same price that these other countries mandate would backfire. Instead, policymakers should use trade negotiations to pressure other wealthy countries to pay their fair share.”

RAPID RESPONSES

John F. Crowley, President and CEO of the Biotechnology Innovation Organization (BIO), released the following statement regarding today’s Executive Order on most favored nation

BIO is the world’s largest advocacy association representing biotechnology companies, academic and research institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations.

WASHINGTON, D.C. (May 12, 2025)

“Most favored nation is a deeply flawed proposal that would devastate our nation’s small- and mid-size biotech companies – the very companies that are the leading drivers of medical innovation in the United States and the cornerstone of America’s biotechnology leadership.

“Importing socialized medicine will not make Americans healthier or our economy stronger. It will only serve to empower China and our other adversaries and undermine our economic and national security. Applying other countries’ antiquated approach to how they value – and pay – for medicines will stall investment across America’s biotech companies, risk access to vital treatments and cures for millions of American patients, and lead to fewer American jobs. 

“Patients and families are not a bargaining chip in a trade war, but that’s exactly how they are being treated – first through proposed tariffs on our nation’s medicines, now with foreign reference pricing in the name of fairness. 

“Researchers that spend years developing cures and breakthrough treatments are being penalized and the US is falling behind in the 21st century biotech race. Meanwhile, US medication prices prop up middlemen that prevent cost savings from being passed on to patients. The solution is investments that ensure the U.S. continues to lead the world in medical innovation, and policies that simplify the system.”