MFN Is Not What the Doctor Ordered

On May 12, President Donald Trump signed an executive order entitled, “Delivering Most-Favored-Nation Prescription Drug Pricing to American Patients.” The order, as its name suggests, sets the stage for implementing a “Most Favored Nation” (MFN) policy for certain prescription drugs. This drug pricing model mimics the pricing policies of countries with socialized medicine. While it may sound good on paper to lower prices, these heavy-handed price controls will ultimately destroy the biopharmaceutical market. It will do so by harming patients, hindering future research and development, and resulting in fewer new life-saving cures. President Trump and congressional Republicans must reject the MFN model and leave price controls out of any healthcare reform proposals.

MFN is nothing more than a government-imposed price control that will hinder patients’ access to life-saving medication. Sure, some drug prices will be lowered in the short-term. However, the government rarely considers the long-term consequences of price controls. There will be significant negative impacts on research and development, as decreased incentives for innovation and investment will limit profitability. It will ultimately slow the development of new and improved treatments.

To see this impact in action, look no further than the government’s current drug price control policies implemented under President Biden, via the 2022 Inflation Reduction Act (IRA), which have been continued under President Trump. As economist Tomas J. Philipson recently noted in The Wall Street Journal, “About 42 [percent] of the 184 cancer therapies that were initially approved during [the 2000-2024] period had follow-on approvals—involving new uses or ‘indications’ for an existing drug—such as treating additional cancer types or being used earlier in the disease, when treatment outcomes tend to be better.” This follow-on progress “is a big driver of new cancer treatments, the largest drug class making up about 35 [percent] of the overall FDA pipeline” but sustained research and associated funding are drying up because of price controls. Following IRA implementation, “companies have halted at least 55 research programs and given up 26 medicines.” Enacting yet another price control through an MFN program would only make the situation worse.

Free enterprise is a cornerstone of the American economy and facilitates the funding and undertaking of high-risk biopharmaceutical research. On average, it takes 10 to 15 years and many millions of dollars to bring a drug from lab to market. Of those drugs, only 12 percent of medications that enter U.S. Food and Drug Administration (FDA) safety and efficacy trials gain approval.

The Trump administration has made this process even more difficult and costly by trying to intervene even more in the already-heavily-regulated healthcare market, on top of their advocacy for an MFN model. The administration has bizarrely tried opening an online pharmacy, claiming that certain drugs purchased through a government website called TrumpRx would be offered at lower-than-usual prices.

As Taxpayers Protection Alliance Vice President of Policy and Government Affairs Dan Savickas notes, “Selling medications on a government website at government-set prices hews dangerously close to practically any definition of socialism. Conservatives and libertarians rightly lambasted the Obama administration for setting up a government-run healthcare plan exchange. Having a taxpayer-funded site sell prescription drugs instead of health insurance and naming it after a Republican president does not make it any less antithetical to free market values.” The government should roll back regulations and make it easier for private companies to produce and sell drugs to consumers, not clumsily try to take over the market.

Instead of relying on a big government approach to address issues created by government policies, President Trump should focus on fostering an environment that encourages biopharmaceutical research and development. This can be achieved by eliminating harmful price controls in the IRA, reining in abuses from pharmacy benefit managers, reducing wasteful spending, and reforming the 340B Drug Pricing Program to restore its original intent. MFN is not what the doctor ordered.