{"id":588477,"date":"2026-09-22T14:07:22","date_gmt":"2026-09-22T14:07:22","guid":{"rendered":"https:\/\/clarivate.com\/life-sciences-healthcare\/?p=588477"},"modified":"2026-09-22T14:07:22","modified_gmt":"2026-09-22T14:07:22","slug":"biopharmas-pricing-pains-trumps-mfn-policy-scrambles-launch-plans","status":"publish","type":"post","link":"https:\/\/clarivate.com\/life-sciences-healthcare\/blog\/biopharmas-pricing-pains-trumps-mfn-policy-scrambles-launch-plans\/","title":{"rendered":"Biopharma\u2019s pricing pains: Trump\u2019s MFN policy scrambles launch plans"},"content":{"rendered":"

For generations it has stood, seemingly as impregnable as the rule of law or the postwar economic order. However, the United States\u2019 sui generis market-driven system of drug pricing and access is beginning to evolve in response to policy changes under policymakers and presidents of both parties.<\/p>\n

The reintroduction of President Trump\u2019s Most Favored Nation (MFN) \u00a0pricing proposal, in particular, is prompting biopharma companies to reassess established approaches to commercial launches within the U.S. and abroad. That playbook was already shifting with the implementation of the Biden-era Inflation Reduction Act (IRA) and the 2025 One Big Beautiful Bill Act (OBBBA). It\u2019s forcing pharmas to second-guess global launch sequences, indication decision, the likely potential and trajectory of launch products and the shape of their portfolios.<\/p>\n

Perhaps most daunting for pharma, it signals a shift to an era in which a bipartisan consensus in Washington staved off U.S. price controls for prescription drugs to one in which policies aimed at reining in drug prices are being pursued on a bipartisan basis.<\/p>\n

It also reinforces the price control measures enacted through the Inflation Reduction Act and the One Big Beautiful Bill Act, creating cross pressures on pricing of innovative medicines in the U.S.<\/p>\n

Echoes of Trump\u2019s zero-sum tariffs approach<\/strong><\/h3>\n

The current U.S. Most Favored Nation policy is rooted in Executive Order 14297<\/a>, issued by President Trump in May of 2025. Titled \u201cDelivering Most-Favored Nation Prescription Drug Pricing to American Patients, the Executive Order directs federal agencies like the Centers for Medicare and Medicaid Services (CMS) to benchmark the prices they\u2019re willing to pay for prescription drugs to those paid by peer countries (specifically, 16-22 Organization for Economic Cooperation and Development, or OECD, member countries) in order to put an end to \u201cglobal freeloading.\u201d<\/p>\n

Trump\u2019s position is that the U.S. pays higher prices for prescription drugs than other wealthy countries in part because it is effectively subsidizing global pharmaceutical R&D. His proposed solution is an international reference pricing approach under which the Department of Health and Human Services would seek to secure lower prices from drug companies, including through potential changes to federal formularies.<\/p>\n

Trump has often taken a zero-sum approach to policy, emphasizing outcomes in which gains for the U.S. are accompanied by greater costs or concessions for other countries. This was reflected in a July 31, 2025 letter the Administration sent to 17 large pharmaceutical companies. In addition to calling on pharma and biotech to adopt MFN pricing for the U.S. and promising a direct-to-patient pathway for drug sales, the White House vowed to \u201cuse trade policy to support manufacturers in raising prices internationally provided that increased revenues abroad are reinvested directly into lowering prices for American patients and taxpayers.\u201d<\/p>\n

That\u2019s what Bristol Myers Squibb did in announcing plans to charge the same price<\/a> for its ground-breaking schizophrenia treatment, Cobenfy, in the U.K. as it does in the U.S. In doing so, BMS could affect market access in the U.K. However, where sales of muscarinic agonists like Cobenfy are forecast to top $3 billion in the U.S. by 2035, according to DRG Disease Landscape & Forecast data, sales in all of Europe are projected to make up just $80 million.<\/p>\n

GLOBE, GUARD and GENEROUS<\/strong><\/h3>\n

On December 22, 2025, the Centers for Medicare and Medicaid Services published a Notice of Proposed Rulemaking outlining how MFN pricing would work for Medicare Part B, covering most complex biologics requiring administration by medical professionals, and Part D, which covers most small-molecule, self-administered drugs. The proposal, which was slated to go into effect October 1, 2026 for Part B and on January 1, 2027 for Part D, authorizes CMS\u2019s Center for Medicare and Medicaid Innovation (CMMI) to test \u201cinnovative payment and service delivery models\u201d to try and reduce federal expenditures on prescription drugs.<\/p>\n

The GUARD<\/a> Model (Guarding U.S. Medicare Against Rising Drug Costs), for Part D, would apply to sole-source drugs and biologics in a number of categories including antidepressants, antivirals and heart drugs, excluding generics\/biosimilars, drugs with costs below the annual minimum spend threshold, and those that have a negotiated maximum fair price (MFP). This proposed model would require manufacturers to pay rebate prices \u00a0where Medicare net prices exceed international reference price benchmarks.<\/p>\n

GUARD\u2019s Part B corollary is called GLOBE<\/a> (Global Benchmark for Efficient Drug Pricing), and it would be a five-year model establishing international reference pricing for Medicare drugs administered in clinical settings and weighing that price against manufacturer rebates paid to the Medicare Supplementary Medical Insurance Trust Fund. Reference pricing would be based on pricing information for countries with a real GDP of at least 60% of the U.S.\u2019 and economies of more than $400 billion.<\/p>\n

For Medicaid, the administration is rolling out its GENEROUS<\/a> Model (Generating Cost Reductions for U.S. Medicaid), under which manufacturers would provide supplemental rebates to participating states for drugs included in the model based on international reference pricing. Unlike GLOBE and GUARD, GENEROUS is based on voluntary participation by both states and manufacturers, with the latter benefiting from standardized coverage criteria for their drugs in state Medicaid programs.<\/p>\n

Under the GLOBE and GUARD proposed rules, issued through CMMI\u2019s Social Security Act \u00a71115A authority, CMS can continue model design, benchmarking, infrastructure development, and voluntary manufacturer agreements, but it likely cannot compel Medicare rebate or payment changes until those rules are finalized through notice-and-comment. However, of note for manufacturers, GENEROUS can proceed further without codification because it relies on voluntary state and manufacturer participation through existing Medicaid supplemental-rebate authority.<\/p>\n

The debate has shifted from theory to implementation<\/strong><\/h3>\n

While a number of midsized biopharmas have balked<\/a> at the administration\u2019s MFN plans, arguing that that the policy could disproportionately affect smaller companies, virtually all large pharmas have now signed on, at least in principle. At the end of August, the White House announced<\/a> an additional nine agreements with pharmas, bringing the total number of MFN signatory companies to 26 and covering 89% of the U.S. market. Some are reportedly reconsidering ex-U.S. licensing deals<\/a> over concerns that they could affect U.S. pricing. The policy is now having real-world implications for how manufacturers large and small go to market.<\/p>\n

At the same time, there\u2019s a lot of uncertainty around these policies. At this writing, we are weeks from a midterm election that will determine the composition of Congress. Executive orders are subject to court review, while future administrations could modify or rescind executive actions, as President Biden did with the first Trump MFN order upon taking office in 2021.<\/p>\n

The durability of these policies will depend in part on how future administrations and Congress approach prescription drug pricing. Given the visibility of out of pocket prescription drug costs to patients, pricing policy is likely to remain an important issue for policymakers across administrations and parties. Going forward, life science companies will need to proactively define and defend their pricing corridor on a global basis before governments define it for them. We\u2019ll be exploring the impacts of MFN pricing and ways companies can best navigate those impacts in a series of posts over the next few months.<\/p>\n

Don\u2019t miss our panel discussion with Fierce Pharma on <\/em>The Next Pricing Frontier: What IRA, MFN and Policy Reform Mean for Pharma<\/em><\/a>, on October 14th<\/sup> at 11am Eastern Standard Time. Our expert panelists will discuss the critical inflection points shaping pricing power, access and asset value, which products and portfolios are most exposed to policy-driven pricing pressure, and how global pricing and launch strategy must adapt in an MFN-driven world. <\/em><\/p>\n

\u00a0<\/em><\/p>\n

The path to Trump\u2019s Most Favored Nation pricing scheme: a timeline<\/strong><\/h3>\n